RBI to inject ₹2 trillion into banking system: Here's why

RBI to inject ₹2 trillion into banking system: Here's why

The Reserve Bank of India (RBI) has announced plans to inject ₹2 lakh crore ($32 billion) into the country's banking system.

The move comes as a response to a liquidity deficit caused by heavy outflows on account of advance tax and goods and services tax (GST) payments.

The central bank will conduct Open Market Operation (OMO) purchase auctions of government securities in four tranches of ₹50,000 crore each on December 29, January 5, January 12, and January 22.

RBI's strategy to stabilize liquidity

The RBI's strategy also includes a USD/INR Buy/Sell Swap auction of $10 billion for three years, scheduled for January 13, 2026.

These measures are aimed at stabilizing liquidity in the banking system, which turned into a deficit on December 17 after nearly two months of continuous support from the central bank through variable rate repo (VRR) auctions and OMO purchases.

RBI's intervention to ensure smooth cash flow

The RBI's intervention is aimed at ensuring a smooth flow of cash in the economy and preventing interest rates from spiraling out of control.

The central bank's measures are expected to benefit not just banks but also the common man looking for loans at reasonable rates.

The move comes as part of the RBI's efforts to maintain financial stability amid changing market conditions.