The Reserve Bank of India (RBI) has launched a significant dual-pronged operation to inject substantial liquidity into the country's banking system. The central bank announced on Tuesday a fresh plan involving large-scale open market purchases of government bonds and a major foreign exchange swap auction.
Details of the Liquidity Injection Plan
This strategic move is designed to ensure orderly market functioning amidst evolving financial conditions. The RBI will conduct Open Market Operation (OMO) purchases of Government of India securities totalling a massive Rs 2 lakh crore (Rs 2,00,000 crore). This substantial amount will be deployed in four equal tranches of Rs 50,000 crore each.
The scheduled dates for these bond purchase auctions are December 29, 2025, January 5, 2026, January 12, 2026, and January 22, 2026. In a parallel measure, the RBI will also hold a USD/INR buy-sell swap auction worth $10 billion with a three-year tenor on January 13, 2026.
Mechanics of the Forex Swap
The central bank clarified the nature of the foreign exchange transaction. In this simple buy-sell swap, commercial banks will sell US dollars to the RBI upfront. Simultaneously, they will enter into an agreement to buy back the equivalent amount of dollars from the central bank at the conclusion of the three-year swap period. This action provides immediate rupee liquidity to the banking system.
"On a review of current liquidity and financial conditions, the Reserve Bank has decided to conduct OMO purchases and a USD/INR buy-sell swap to inject liquidity into the banking system," the RBI stated in its official release.
Context and Continued Vigilance
This latest intervention follows closely on the heels of similar recent actions by the monetary authority. Just days prior, the RBI had conducted OMO purchases worth Rs 1 lakh crore alongside a $5 billion dollar-rupee buy-sell swap auction, also with a three-year tenor.
The central bank has affirmed its commitment to continuous monitoring of liquidity and overall financial market stability. The RBI statement indicated it stands ready to take further steps as required to maintain smooth and orderly system liquidity, suggesting a proactive approach to managing monetary conditions.
The combined force of the bond purchases and the forex swap is expected to significantly ease liquidity tightness, support productive sectors of the economy, and stabilize money market rates. The scheduled auctions between late December 2025 and late January 2026 provide a clear roadmap for this calibrated liquidity infusion.
