The Reserve Bank of India on Monday announced a ₹20,000 crore bond buyback operation aimed at injecting liquidity into the banking system. This move comes amid rising concerns over tight liquidity in the short-term money market and a spike in call money rates.
Bond yields fell by 6 basis points following the announcement, signaling investor confidence in the RBI’s liquidity support measures. The Bank Nifty also gained 0.8% intraday, led by HDFC Bank and SBI.
The central bank’s decision is expected to lower short-term borrowing costs and help banks manage capital requirements ahead of the upcoming credit cycle. The RBI reiterated that this is a tactical step and not a shift in its policy stance.
The rupee remained stable at ₹83.19 against the US dollar.