RBI sells ₹50000 cr govt securities in OMO to drain surplus liquidity | Economy & Policy News

India’s central bank sold 500 billion rupees ($5.2 billion) of bonds under its open market operations program as it stepped up efforts to drain surplus cash from the banking system.

The Reserve Bank of India sold bonds in the 2029–2032 tenors as planned, the authority said in a statement. The cutoff prices ranged from 102.25 rupees to 105.63 rupees, broadly in line with estimates from a survey.

Yields climbed after the auction results, with the five-year bond yield last trading six basis points higher at 6.83%.

The sales were the first tranche of the 1 trillion rupee ($10.5 billion) liquidity mop-up announced by the central bank on Sept. 11. The other two operations are scheduled for Sept. 21 and Sept. 28.

Excess cash in India’s banking system hit a record 11 trillion rupees earlier this month as a deluge of dollars from a diaspora deposit program led to a surge in cash held by lenders. Yields have jumped since the RBI announced the bond sales last week, as concerns about excess supply weighed on the market.