RBI Faces Pressure: More Bond Purchases Needed to Control Borrowing Rates

• RBI may need to buy an additional ₹2 lakh crore in bonds by March 2026 to maintain credit growth momentum, according to SBI Research.
• The central bank has already injected over ₹7.7 lakh crore since April 2024, including ₹5 lakh crore via OMOs, to manage liquidity.
• Global uncertainty, driven by rising gold and silver prices, and the deferral of Indian bonds' inclusion in the Bloomberg Global Aggregate Index, are increasing pressure on RBI.
• Despite a dovish stance from Governor Sanjay Malhotra, bond yields have continued to rise, with the 10-year yield up over 80 basis points since May 2025.
• Rising yields and a weakening rupee have led to higher borrowing costs for everyone, with Indian government bonds returning only 6.7% in 2025.

Why It Matters: RBI likely needs to significantly increase bond purchases to stabilize borrowing rates amid rising yields and global uncertainty.