RBI Keeps Bond Sales, FX Swaps Among Options to Manage Surplus Liquidity

Generic user silhouette icon 5paisa Capital Ltd - 0 min read

Last Updated: 11th September 2026 - 05:00 pm

The Reserve Bank of India has several options available to manage surplus liquidity in the banking system, including open-market bond sales and foreign-exchange swaps, Governor Sanjay Malhotra indicated on September 11. 

The central bank’s focus is on keeping liquidity at an appropriate level while ensuring that the overnight interest rate remains aligned with the repo rate. 

RBI Has Multiple Options to Absorb Liquidity 

Some of the excess cash in the banking system is expected to be withdrawn over time through foreign-exchange interventions and banks’ reserve requirements. 

Beyond variable rate reverse repo operations, the RBI can also turn to open-market operations or foreign-exchange swaps if additional liquidity management is required. 

The governor’s comments leave the choice of instrument open rather than signalling that any particular measure will necessarily be used. 

Bond Yields Rise After Open-Market Sales Mention 

The bond market reacted after open-market debt sales were mentioned as one of the options available to the RBI. 

Indian government bonds extended their decline, pushing yields to their highest level in more than three months. 

Selling bonds through open-market operations can absorb rupee liquidity from the banking system. The RBI’s comments, however, were framed around the range of tools at its disposal rather than an announcement of a fresh bond-sale programme. 

For the central bank, the stated objective remains maintaining appropriate liquidity conditions and keeping the overnight rate aligned with the policy repo rate. 

FREE Trading & Demat Account
Open FREE Demat Account with endless opportunities.
  • Flat ₹20 Brokerage
  • Next-gen Trading
  • Advanced Charting
  • Actionable Ideas
+91
''
By proceeding, you agree to our T&Cs*
Mobile No. belongs to
OR
hero_form

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.

Open Free Demat Account

Be a part of 5paisa community - The first listed discount broker of India.

+91

By proceeding, you agree to all T&C*

footer_form