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Informist, Friday, Jan. 23, 2026

 

--RBI did not buy or sell any gilts outside OMO auction in week ended Jan 16 

 

MUMBAI – The Reserve Bank of India did not buy government bonds on-screen in the week ended Jan. 16, weekly statistical data released by the central bank Friday showed. Several traders had speculated that the central bank bought between INR 80 billion and INR 100 billion worth of gilts in the secondary market between Jan. 9 and Jan. 14.

 

Since the RBI accounts for its on-screen gilt trades based on the day of settlement, traders were expecting any purchases made by the central bank on Jan. 9 to show up in data for the week ended Jan. 16. The gilts market was shut Jan. 15. A few traders, however, had remained sceptical of on-screen purchases by the RBI after data for the week ended Jan. 9 also did not show any purchases by the central bank.

 

Data released Friday showed INR 500-billion worth of open market operation purchases by the RBI on Jan. 13, the day of settlement of the OMO auction it had conducted on Jan. 12. In the week ended Jan. 2, the central bank had purchased gilts worth INR 500 million in the secondary market.

 

The "Others" segment of bond market participants--which includes the central bank, insurance companies, and provident funds--had net purchased gilts worth INR 141.35 billion between Jan. 9 and Jan. 14, as per data from Clearing Corp. of India. Traders speculated that this was the central bank buying gilts in the secondary market to prevent the 10-year benchmark 6.48%, 2035 gilt yield from rising past the psychologically crucial 6.70% level. Such speculation continued this week, too, especially when the 10-year benchmark yield hit 6.6950% Monday, at a time bond prices tumbled globally. So far till Thursday, this segment has net purchased gilts worth nearly INR 100 billion.

 

Earlier in the month, traders were speculating that the central bank was purchasing gilts on-screen to replenish its portfolio after the redemption of the 7.59%, 2026 gilt, after it made on-screen purchases at the time of maturity of the 5.15%, 2025 gilt in November. The RBI likely held INR 350 billion to INR 400 billion of the 2026 gilt, dealers said.

 

In discussions with the central bank this week, several banks had asked the RBI to ramp up its secondary market purchases of bonds, Informist reported Friday. Smaller banks cited missing out on the OMO auctions and concentration of the liquidity infused by the RBI in the hands of a few market participants--the successful bidders at auction. With concern of heavy supply of state bonds and gilts in the upcoming financial year, elevated global bond yields, and a delay in Bloomberg's inclusion of Indian government bonds in its flagship Global Aggregate Index, bond traders are depending on the RBI to purchase gilts through auctions and on-screen to deter a sharp rise in yields.  End

 

Reported by Cassandra Carvalho

Edited by Rajeev Pai

 

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