The central bank said it will use a combination of open market bond purchases, a foreign exchange swap and a variable rate repo operation to ease liquidity conditions in the financial system.
As part of the measures, RBI will conduct a 90-day variable rate repo (VRR) operation for an amount of ₹25,000 crore on January 30, 2026, allowing banks to borrow funds at market-determined rates against collateral.
Further, RBI will also carry out a USD/INR buy/sell swap auction of $10 billion with a tenor of three years on February 4, a move aimed at injecting durable rupee liquidity while managing foreign exchange market conditions.
In addition, the central bank said it will purchase government securities worth an aggregate ₹1,00,000 crore through open market operations in February. The bond purchases will be conducted in two tranches of ₹50,000 crore each on February 5 and February 12.
Moreover, RBI said detailed instructions for each of the liquidity operations will be issued separately. It added that it will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions.
Also read: Banks want RBI to inject Rs 3-5 lakh crore via OMO
Economists seek clearer signal on OMO purchases
Economists at Indian lenders have urged the Reserve Bank of India (RBI) to clearly communicate its commitment to open market operation (OMO) purchases of at least ₹3–5 lakh crore, arguing that such assurance would help cool government bond yields and speed up the transmission of past policy rate cuts, the Economic Times reported on Thursday.
They cautioned that a prolonged liquidity deficit could begin to weigh on credit demand and economic growth in Asia’s second-largest economy.
The issue was discussed during pre-policy consultation meetings held on January 21 and 22, which were attended by RBI Governor Sanjay Malhotra, Deputy Governor Poonam Gupta and Indranil Bhattacharyya, executive director in charge of the monetary policy department.
An economist who attended one of the meetings told ET tight system liquidity, strong credit growth and sustained foreign exchange market intervention by the RBI had largely offset the liquidity impact of earlier OMO purchases.
No case for February rate cut
Participants also flagged elevated certificate of deposit (CD) rates amid tight liquidity, as well as uncertainty around the new inflation and GDP series, the economist said. One participant suggested the RBI consider easing the intensity of its foreign exchange market intervention to reduce liquidity leakage.
However, there was broad agreement that the central bank should refrain from cutting rates at its February policy meeting and instead wait for data under the new inflation and GDP series to be available, said another economist who attended the discussions. With the revised series expected to come into effect with the release of inflation data in February, economists do not expect the RBI to revise its inflation or growth forecasts in the February monetary policy review.
System liquidity has averaged a surplus of ₹59,356 crore so far in January. The RBI conducted OMO purchases worth ₹3 lakh crore in December and January, taking total OMO purchases in the current financial year to ₹5.20 lakh crore. The monetary policy committee is scheduled to announce its decision on the benchmark repo rate on February 6, following the presentation of the Union Budget on February 1. The RBI has cumulatively cut the repo rate by 125 basis points to 5.25% since February 2025.
