RBI Open Market Operation
The Reserve Bank of India conducted a government securities open market purchase operation (OMO) of ₹50,000 crore on March 10, 2026, injecting liquidity into the banking system at a time when tightness has emerged due to forex market intervention and advance tax outflows. This was the largest single OMO by the RBI since April 2020 during the Covid liquidity relief phase.
Liquidity Context
Banking system liquidity, as measured by the net position at the RBI's Liquidity Adjustment Facility, has been in deficit by ₹60,000–₹80,000 crore in recent weeks. The deficit has been driven by two primary factors: heavy RBI forex market intervention (selling dollars to support the rupee absorbs rupee liquidity from the banking system) and the March 15 advance tax payment deadline drawing funds out of bank accounts.
Market Impact
The OMO announcement drove a 7–12 basis point rally in government bond yields across the 5-year to 30-year curve. The benchmark 10-year Government of India bond yield fell from 7.18% to 7.06% during the day — reflecting market optimism that RBI would continue supporting liquidity. Short-term money market rates (91-day T-bill) also eased by 10 bps.
Upcoming Tranche
The RBI simultaneously announced a second OMO purchase of ₹25,000 crore scheduled for March 13, taking the total planned liquidity injection to ₹75,000 crore over the week. MPC member Shashanka Bhide noted that "ensuring adequate system liquidity is a necessary condition for effective monetary policy transmission" — signalling that rate cuts, if warranted, would be prepared for with sufficient liquidity groundwork.
