The Reserve Bank of India (RBI) announced a significant liquidity injection package in late December 2025, comprising Open Market Operations (OMO) purchase auctions worth ₹2 lakh crore and a USD/INR buy-sell foreign exchange swap of $10 billion with a 3-year tenor. The OMO purchases are to be conducted in four tranches of ₹50,000 crore each, with the RBI purchasing government securities from banks to infuse rupee liquidity into the system. The USD/INR swap simultaneously addresses the dual challenge of rupee liquidity tightness and managing the exchange rate, as the RBI buys dollars from banks (injecting rupees) with a commitment to sell them back after three years. This move comes against the backdrop of systemic liquidity deficits in the banking system, which had persisted due to advance tax outflows, goods and services tax (GST) payments, and tight foreign exchange conditions. The RBI's intervention signals its intent to support economic growth and credit flow while managing inflation and exchange rate stability — a delicate balancing act in an environment of global monetary tightening, geopolitical uncertainty, and a depreciating rupee. The announcement was widely seen as a proactive liquidity management measure ahead of the Union Budget 2026-27 and the anticipated monetary policy review in February 2026.
RBI Announces ₹2 Lakh Crore OMO Purchase and $10 Billion USD/INR Swap to Inject Liquidity into Banking System
The Reserve Bank of India (RBI) announced a significant liquidity injection package in late December 2025, comprising Open Market Operations (OMO) purchase auctions worth ₹2 lakh crore and a USD/INR buy-sell foreign exchange swap of $10 billion with a 3-year tenor. The OMO purchases are to be conducted in four tranches of ₹50,000 crore each, with the RBI purchasing government securities from banks to infuse rupee liquidity into the system. The USD/INR swap simultaneously addresses the dual challenge of rupee liquidity tightness and managing the exchange rate, as the RBI buys dollars from banks (injecting rupees) with a commitment to sell them back after three years. This move comes against the backdrop of systemic liquidity deficits in the banking system, which had persisted due to advance tax outflows, goods and services tax (GST) payments, and tight foreign exchange conditions. The RBI's intervention signals its intent to support economic growth and credit flow while managing inflation and exchange rate stability — a delicate balancing act in an environment of global monetary tightening, geopolitical uncertainty, and a depreciating rupee. The announcement was widely seen as a proactive liquidity management measure ahead of the Union Budget 2026-27 and the anticipated monetary policy review in February 2026.
Key facts
- RBI announced OMO purchase auctions worth ₹2 lakh crore to inject liquidity into banking system.
- A $10 billion USD/INR buy-sell foreign exchange swap with 3-year tenor was also announced.
- OMO purchases will be conducted in four tranches of ₹50,000 crore each.
- The USD/INR swap addresses both rupee liquidity deficit and exchange rate management.
- RBI buys dollars from banks and injects rupees, committing to reverse the transaction in three years.
- The measures aim to ease tight liquidity conditions in the Indian banking system.
Mains angle
Q: How do the RBI's ₹2 lakh crore OMO purchases and $10 billion USD/INR swap address banking liquidity deficits?
Answer (50 words):
RBI addressed liquidity deficits from advance tax and GST outflows via OMO purchases of ₹2 lakh crore in four ₹50,000 crore tranches buying government securities, and a $10 billion three-year USD/INR swap injecting rupees while managing exchange rate pressure, supporting credit flow ahead of the February 2026 policy review.
Static prep for this topic
Read the permanent syllabus behind this story.
6-axis classification
Appears in these topics
Practice MCQ from this story
SolveTap an option below. Correct or incorrect feedback appears instantly.
In late December 2025, the Reserve Bank of India announced an Open Market Operations (OMO) purchase auction of how much to inject rupee liquidity?
The RBI announced OMO purchase auctions worth ₹2 lakh crore, to be conducted in four tranches of ₹50,000 crore each, to inject rupee liquidity into the banking system amidst systemic liquidity deficits.
Source: https://rbi.org.in/Scripts/BS_PressreleaseDisplay.aspx?prid=61751
Frequently asked questions
What are Open Market Operations (OMO) and how does the RBI use them to inject liquidity?
Open Market Operations (OMO) are RBI's purchase or sale of government securities in the open market to regulate liquidity in the banking system. When RBI conducts OMO purchases, it buys government securities from banks and credits their accounts with rupees, thereby injecting liquidity into the system. The RBI announced OMO purchases worth ₹2 lakh crore in four tranches of ₹50,000 crore each in late December 2025.
What is a USD/INR buy-sell foreign exchange swap and why did the RBI announce it?
A USD/INR buy-sell swap is a transaction where the RBI purchases US dollars from banks (paying rupees) and simultaneously agrees to sell the dollars back at a future date. The RBI announced a $10 billion swap with a 3-year tenor in December 2025. This simultaneously addresses two challenges: it injects rupee liquidity into the banking system and helps manage the exchange rate by supporting the rupee's value against the dollar.
Why was the RBI's December 2025 liquidity injection package considered significant?
The combined OMO and forex swap package was significant because it addressed unusually tight liquidity conditions in the Indian banking system. The dual-tool approach — OMO purchases for domestic rupee liquidity and a USD/INR swap for both forex and rupee liquidity — reflected the scale of the challenge. The total package of ₹2 lakh crore in OMO plus $10 billion swap represented one of the largest coordinated liquidity operations by the RBI.
What is the difference between OMO purchases and a repo rate cut as tools for liquidity management?
A repo rate cut reduces the cost at which banks borrow from the RBI, indirectly encouraging more borrowing and stimulating lending. OMO purchases directly inject rupee liquidity by transferring funds to banks in exchange for government securities — they do not change the price of borrowing but increase the supply of money available. OMOs are a more direct and immediate liquidity tool compared to a rate cut.
How does a USD/INR swap differ from a conventional forex intervention by the RBI?
In a conventional forex intervention, the RBI buys or sells dollars in the spot market permanently to influence the exchange rate. In a USD/INR buy-sell swap, the transaction is temporary — the RBI buys dollars now and commits to selling them back at a pre-agreed future date and rate. The swap injects rupee liquidity temporarily without permanently depleting foreign exchange reserves, making it a more flexible instrument.
Was this useful?
Share corrections or missing exam angles with the editorial team.
Send feedback