In view of the evolving liquidity conditions and the outlook, the Reserve Bank has decided to conduct OMO (open market operation) purchases of government securities of ₹1 lakh crore and a 3-year USD/INR Buy Sell swap of $5 billion later this month to inject durable liquidity into the system.
“I would like to reiterate that we are committed to provide sufficient durable liquidity to the banking system… We continuously assess the durable liquidity requirements of the banking system due to changes in currency in circulation, forex operations, and reserve maintenance. Going forward too, we shall continue to do so,” Governor Sanjay Malhotra said.
The RBI, in a statement, said it will conduct OMO purchase auctions of Government Securities (G-Secs) for an aggregate amount of ₹1 lakh crore in two tranches of ₹50,000 crore each to be held on December 11, 2025, and December 18, 2025.
Further, a USD/INR Buy/Sell Swap auction of $5 billion for a tenor of three years to be held on December 16, 2025
The Governor noted that while the objective of purchase (sale) under OMO is to provide (absorb) durable liquidity, the purpose of repo operations is to manage transient liquidity so as to align the operating target — the Weighted Average Call Rate (WACR) — to the policy repo rate (5.25 per cent).
“So, it is quite possible that we inject durable liquidity through purchase of government securities under OMO on the one hand while simultaneously withdrawing transient liquidity through a VRRR (variable rate reverse repo) operation on the other hand,” he said.
Malhotra reiterated that the primary instrument of monetary policy is the policy repo rate. It is expected that changes in the short term interest rates will transmit to various long-term rates.
At the same time, the primary purpose of open market operations is to provide sufficient liquidity and not to directly influence G-sec yields, he added.
Published on December 5, 2025
