The Reserve Bank of India (RBI) has purchased government securities equivalent to 47 per cent of the Centre’s total bond issuances so far in FY26 to support liquidity in the banking system, according to public data.According to news agency PTI , the data compiled from RBI showed that the Centre raised Rs 13,65,000 crore between April 4, 2025 and February 13, 2026 through issuance of government securities as part of its gross borrowing programme.During the same period, the RBI conducted Open Market Operation (OMO) purchase auctions amounting to Rs 6,39,203 crore, injecting durable liquidity into the banking system.
Cushioning liquidity amid heavy borrowing
The large-scale OMO purchases came amid sustained government borrowing, which typically absorbs liquidity from the banking system and puts upward pressure on bond yields.By purchasing bonds from the secondary market, the central bank infused liquidity and helped maintain orderly market conditions, experts said, as per PTI.The move helped cushion the banking system from liquidity tightness and prevented excessive hardening of yields despite the heavy supply of government securities. It also ensured adequate funds in the system to support credit growth.“RBI’s OMO purchases have been actively deployed to ensure adequate core liquidity, amid RBI’s USD sales at a time of capital outflows and INR depreciation pressures,” said Brijesh Shah, senior vice president, Fixed Income at Bandhan AMC.“Various tools deployed by RBI including OMO purchases have thus provided durable liquidity and, in the process, mitigated upward pressure from global market forces,” he added.He further noted that potential positive sentiment around capital flows following the recent India-US trade deal, which could reduce the need for foreign exchange intervention, along with deployment of tools like FX swaps, may imply a lesser need for OMOs going ahead.
Liquidity swings and market conditions
Liquidity remained in surplus mode for much of FY26, barring a few episodes when it slipped into deficit, according to PTI. OMO purchase operations intensified from December 2025, when liquidity tightened and fell into deficit mode.The RBI’s liquidity infusion also helped keep money market rates contained, with overnight rates trading close to the repo rate.Since January 2025, bond yields have remained volatile due to geopolitical tensions pushing up crude oil prices, expectations around the end of the rate cut cycle, and higher-than-expected gross borrowing numbers for FY27 announced in the Union Budget, reported PTI.The 10-year benchmark government bond yield moved in the 6.30–6.70 per cent range between January 2025 and February 2026.
FY27 borrowing plan and yield impact
The government has planned to borrow Rs 17.2 lakh crore in FY27, significantly higher than market projections of Rs 16.5–17 lakh crore, which led to a sharp rise in government bond yields.However, net borrowing is pegged at Rs 11.73 lakh crore, compared with Rs 11.53 lakh crore earlier, an increase of Rs 20,000 crore.RBI data also showed that government securities worth Rs 5.47 lakh crore are scheduled to mature.Government borrowing is a key determinant of interest rates in the economy. A higher supply of bonds typically exerts pressure on yields unless matched by strong demand from banks, insurance companies and foreign investors.
