In a major move to ensure ample cash flow in the nation's financial system, the Reserve Bank of India (RBI) has unveiled a significant dual-operation plan. The central bank will inject liquidity through large-scale purchases of government bonds and a substantial foreign exchange swap.
Details of the Liquidity Boost Package
The RBI's strategy involves two key instruments. First, it will conduct Open Market Operations (OMO) to purchase Government of India securities worth a staggering ₹2 trillion (₹2,00,000 crore). This massive purchase will be executed in four equal tranches of ₹50,000 crore each.
The scheduled dates for these OMO purchase auctions are December 29, 2025, January 5, 2026, January 12, 2026, and January 22, 2026.
Forex Swap to Reinforce Liquidity
Complementing the bond purchases, the RBI will also conduct a USD/INR Buy/Sell Swap auction of $10 billion. This operation, set for January 13, 2026, will have a tenor of three years.
In this swap, commercial banks will sell US dollars to the Reserve Bank and simultaneously enter into a forward contract to buy back the same amount of dollars from the RBI after three years. This is a simple buy/sell foreign exchange swap from the central bank's side, designed to provide durable rupee liquidity to the banking system.
Context and RBI's Monitoring Stance
This latest announcement follows similar, though smaller, operations conducted recently. Just days ago, the RBI had conducted ₹1 trillion OMO purchase auctions and a $5 billion USD/INR swap auction.
The central bank stated that the decision stems from a review of current liquidity and financial conditions. It emphasized its commitment to continuous vigilance, stating it will continue to monitor evolving liquidity and market conditions and take further measures as needed to ensure orderly market functioning.
This proactive double-barreled approach underscores the RBI's focus on maintaining comfortable liquidity levels to support economic activity and ensure the smooth functioning of financial markets.
