Following a review of prevailing liquidity and financial market conditions, the central bank said it will inject funds through multiple instruments over the next few weeks to ensure orderly market functioning.
As part of the measures, the RBI will conduct a 90-day Variable Rate Repo (VRR) operation worth ₹25,000 crore on January 30, allowing banks to borrow funds at market-determined rates for a longer tenor than overnight liquidity windows.
In a major dollar liquidity move, the central bank will also hold a USD/INR buy-sell swap auction of USD 10 billion on February 4, with a tenor of three years. Such swaps typically help ease pressure on domestic liquidity while managing volatility in the foreign exchange market.
Additionally, the RBI will carry out open market operation (OMO) purchase auctions of Government of India securities amounting to ₹1 trillion in aggregate. The purchases will be conducted in two tranches of ₹50,000 crore each on February 5 and February 12, respectively.
Market participants have been closely watching liquidity conditions after sustained government cash balances, tax outflows and forex market operations tightened surplus liquidity in recent weeks. The RBI’s move is expected to improve durable liquidity, support credit flow and stabilise short-term money market rates.
The central bank said detailed operational instructions for each of the measures will be issued separately.
“The Reserve Bank will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions,” the RBI said in a statement.
The announcement underscores the RBI’s intent to remain flexible on liquidity management even as it maintains a tight stance on inflation, using targeted tools rather than broad policy rate changes to manage short-term market stress.
