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Informist, Friday, Feb. 6, 2026

--RBI bought INR-47.40-bln gilts outside OMO auction in wk to Jan 30 

NEW DELHI – The Reserve Bank of India bought INR 47.40 billion of bonds in the secondary market and outside open market operation auctions in the week ended Jan. 30, data released by the central bank Friday showed. This was the second straight week of purchases, after the RBI's on-screen buys worth INR 126.55 billion in the week ended Jan. 23.

The RBI accounts for its on-screen gilt trades based on the day of settlement. Data showed the RBI bought bonds worth INR 11.80 billion on Jan. 23 and INR 35.60 billion on Jan. 29 in the secondary market. These purchases came in the same week of it buying INR 500 billion of gilts at OMO auction, on Jan. 29.

The 'Others' segment of bond market participants, which includes the RBI, provident funds and life insurers, net purchased gilts worth INR 29.52 billion on Jan. 23 and INR 47.44 billion on Jan. 29 in the secondary market, as per data from Clearing Corp. of India. Some traders had expected the data to show a larger quantum of purchases from the RBI, while others said the lack of hefty 'Others' purchases in the Jan. 30 week had suggested a lower quantum of buys than the previous week.
 

The 'Others' segment net purchased gilts worth INR 385.43 billion in January, fuelling speculation that the central bank is purchasing gilts on-screen, especially the benchmark 10-year 6.48%, 2035 gilt, to prevent its yield from sustaining a rise above the psychologically crucial 6.70% level. However, since data for the first two weeks of the month did not confirm the RBI's buys, traders speculated that pension funds and insurance companies were purchasing gilts in the secondary market. Bond auctions during the month had also shown increased interest from these long-term investors, dealers said.

Traders had speculated that the central bank was purchasing gilts on-screen to replenish its portfolio after the redemption of the 7.59%, 2026 gilt on Jan. 9, 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. However, traders were confused with the pace and pattern of the RBI's secondary market purchases as they were not concentrated around the date of maturity and occurred in small quantums, as a supplement to its OMO auctions.

During discussions with the central bank in January, several banks had asked the RBI to ramp up its secondary market purchases of bonds, Informist had reported. 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 auctions.  End

Reported by Aaryan Khanna

Edited by Tanima Banerjee

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