RBI Liquidity Infusion of ₹1.87 Trillion: OMO and Swap
Why in the news
Tight liquidity was keeping some interest rates high even after February’s 25 bps repo cut. RBI therefore announced a large set of measures to add funds and help policy transmission.
Key facts
- Total infusion: ₹1.87 trillion.
- OMO purchases of government securities worth ₹1 trillion, in two tranches of ₹50,000 crore each (March 12 and March 18).
- USD/INR buy-sell swap of $10 billion, 36-month tenor.
- Liquidity stood at a ₹55,000 crore deficit on March 6, persisting for 11 consecutive weeks.
Liquidity trend
| Period | System liquidity |
|---|---|
| Nov 2024 | ₹1.35 trillion surplus |
| Jan 2025 | ₹2.07 trillion deficit |
| Feb 2025 | ₹1.59 trillion deficit |
| 6 March 2025 | ₹55,000 crore deficit |
Earlier steps included OMOs of ₹60,000 crore and forex swaps of $5 billion and $10 billion in January-February.
Expert views
- Nomura: RBI is proactively trying to move the system into surplus for effective transmission.
- Radhika Rao (DBS): measures show an accommodative stance.
- Harsh Dugar (Federal Bank): banks may trim deposit rates.
- Suyash Choudhary (Bandhan MF): conditions were not conducive to rate transmission.
Likely impact
- Lower deposit rates and cheaper funding for banks.
- Steadier corporate bond spreads and state government security yields.
- Less rupee depreciation worry due to forex intervention.
- Better transmission for MCLR-linked loans.
Exam angle
- OMO = RBI buying or selling government securities to manage liquidity.
- March 12 OMO: ₹50,000 crore across six G-Secs, from 7.10% GS 2029 to 7.23% GS 2039.
- Repo rate was cut by 25 bps in February 2025.