RBI Announced to Inject ₹2.90 Lakh Crore Liquidity into Banking System

The Reserve Bank of India (RBI) has announced a fresh set of measures to inject ₹2.90 lakh crore into the banking system. The decision announced on December 23, 2025, is aimed at improving liquidity conditions, supporting banks, and managing volatility in the foreign exchange market amid global economic pressures.

What Has RBI Announced?

The RBI will inject liquidity through two major instruments,

• Open Market Operation (OMO) Purchases
• The RBI will conduct OMO purchase auctions of Government of India securities worth ₹2,00,000 crore.
• Conducted in four tranches of ₹50,000 crore each

Scheduled on

• December 29, 2025
• January 5, 2026
• January 12, 2026
• January 22, 2026

Through OMOs, the RBI buys government bonds from the market, thereby injecting rupee liquidity into banks.

Dollar Rupee Buy/Sell Swap Auction

The RBI will also conduct a Dollar-Rupee (USD/INR) Buy/Sell Swap auction of $10 billion.

• Tenor: 3 years
• Auction date: January 13, 2026

In this swap, the RBI buys dollars now and sells them at a future date, helping manage both rupee liquidity and excess dollar liquidity in the system.

Total Liquidity Injection

• ₹2,00,000 crore through OMO bond purchases
• Approx. ₹90,000 crore equivalent through the dollar-rupee swap
• Total liquidity support: ₹2.90 lakh crore

Why Are These Measures Important?

According to analysts, these steps will have multiple benefits,

Support the Banking System

• Improves availability of funds with banks
• Helps maintain credit flow to businesses and consumers

Manage Dollar Liquidity

• Reduces excess dollar liquidity in the market
• Helps correct high dollar-rupee forward premiums

Protect Foreign Exchange Reserves

• RBI had sold $11.88 billion in October 2025 to support the rupee
• Total dollar sales in recent months exceeded purchases
• Swap operations reduce the need for direct dollar sales

Stabilise the Rupee

• The rupee has faced pressure due to U.S. tariff-related global uncertainty
• Liquidity measures help reduce market volatility

RBI’s Recent Liquidity Actions

• RBI has already purchased government bonds worth ₹6.5 lakh crore in 2025
• Conducted a $5 billion dollar-rupee swap on December 16, 2025
• Continues to actively manage liquidity using multiple tools
• The RBI has also stated that it will closely monitor market conditions and take further action if required to ensure orderly liquidity.

Background: Why RBI Injects Liquidity

Liquidity refers to the availability of money in the banking system. When liquidity tightens, banks find it harder to lend which can slow down economic activity. The RBI regularly uses monetary tools to ensure adequate flow of funds, stable interest rates, and smooth functioning of financial markets.

In recent months, factors such as,

• Pressure on the Indian rupee
• Global trade uncertainties
• Dollar outflows due to RBI intervention

have prompted the central bank to take proactive liquidity-supporting steps.

Key Takeaways

• RBI announced liquidity measures worth ₹2.90 lakh crore
• ₹2,00,000 crore via Open Market Operation (OMO) bond purchases
• $10 billion dollar-rupee buy/sell swap for 3 years
• OMO auctions scheduled between Dec 29, 2025 – Jan 22, 2026
• Swap auction scheduled on January 13, 2026
• Aim: improve banking liquidity, manage forex volatility, stabilise rupee
• RBI has bought ₹6.5 lakh crore worth of bonds in 2025 so far

Question

The primary objective of RBI’s liquidity injection is to:

A. Increase inflation
B. Improve liquidity and support banks
C. Reduce government borrowing
D. Increase tax collection