RBI to Inject Over $23 Billion Into Banking System
The Reserve Bank of India has announced measures to inject more than $23 billion, or around ₹1.9 lakh crore, into the banking system to ease tightening liquidity conditions. The move comes amid persistent cash shortages driven by foreign exchange interventions, tax outflows and strong credit demand.
Tools and timelines
The liquidity infusion will be carried out through multiple instruments, including variable rate repo operations, open market bond purchases and a long-tenure dollar-rupee swap. The RBI will conduct a 90-day variable rate repo operation later this month, followed by a multi-year forex swap and government bond purchases in early February.
Reason for intervention
System liquidity has remained under pressure as the central bank absorbed funds to stabilise the rupee and manage volatility in financial markets. The RBI said the latest measures are aimed at ensuring adequate liquidity while maintaining orderly market conditions.
Market impact
The steps are expected to help ease pressure on short-term interest rates, moderate government bond yields and support the flow of credit to the economy. Market participants are closely watching how sustained liquidity support aligns with the RBI’s broader inflation and monetary policy objectives.
