Central Bank Launches ₹1 Lakh Crore Cash Absorption Drive
What Happened
The Reserve Bank of India (RBI) announced it will sell ₹1 lakh crore worth of government bonds through Open Market Operations (OMO) to absorb excess liquidity from the banking system. The sales will take place in three tranches: ₹50,000 crore on September 17, ₹25,000 crore on September 21, and ₹25,000 crore on September 28. This is the RBI's first net sale of government securities in two years.
Key Takeaways
India's banking system is currently sitting on a liquidity surplus of more than ₹10 lakh crore, partly due to large foreign currency inflows. By selling bonds, the RBI aims to pull cash out of the system, keep short-term interest rates aligned with policy rates, and prevent excess liquidity from fueling inflation.