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Informist, Friday, Jan. 9, 2026

 

--RBI bought INR-500-mln gilts outside OMO auction in wk to Jan 2 

 

NEW DELHI – The Reserve Bank of India bought gilts worth INR 500 million in the secondary market in the week ended Jan. 2, data released by the central bank showed. This was the second straight week that the central bank has bought gilts in the secondary market, though the latest number is minuscule.

 

During the week, the central bank had infused liquidity worth INR 500 billion by buying gilts through an open market operation auction conducted Dec. 29. The data showed its purchases outside auction were settled Jan. 1, which means it bought the bonds on Dec. 31. This is in line with activity in prior quarters, when it bought a token amount of gilts in the secondary market towards the end of the March, June and September quarters.

 

Data last week showed the RBI bought INR 41.55 billion worth of gilts in the secondary market in the week ended Dec. 26. The entirety of the buys were settled on Dec. 24, which means the RBI bought the gilts on Dec. 23, when the 10-year benchmark gilt yield had risen to 6.70%, its highest in 2025-26 (Apr-Mar). 

 

RBI Governor Sanjay Malhotra said in December that open market operations are primarily used to manage liquidity instead of influencing bond yields. The RBI's net absorption from the banking system – a proxy for the liquidity surplus – was INR 173.35 billion on Dec. 31. The liquidity surplus was helped by the government's month-end spending after advance tax and goods and services tax payments in December had led to a deficit in the latter half of the month.

 

With this, the RBI ends 2025 with over INR 7.0 trillion in bond purchases, both through auction and in the secondary market. Traders expect the RBI to once again purchase gilts on-screen in January, when the 7.59%, 2026 bond matures on Sunday. Market participants estimate the central bank holds INR 350 billion-INR 400 billion of the bond. However, some dealers said that the central bank may forego any additional purchases at it has three auctions of INR 500 billion each scheduled on Jan. 12 and Jan. 22, which may take care of the replacement demand. The RBI has already bought gilts worth INR 2 trillion since December at OMO auctions.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Aaryan Khanna

Edited by Tanima Banerjee                                                                                                                                                                                                                                                                                                                                                            

 

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