RBI Absorbs Nearly Half of Govt's Bond Supply in FY26 Through OMO Purchases

• The Reserve Bank of India (RBI) purchased government securities equivalent to 47% of the Centre's total bond issuances in FY26 to support banking system liquidity.
• RBI conducted Open Market Operations (OMO) purchase auctions totaling ₹6,39,203 crore, injecting durable liquidity into the banking system.
• These large-scale purchases helped cushion the banking system from liquidity tightness and prevented excessive hardening of bond yields despite heavy government borrowing.
• OMO purchases were intensified since December 2025 when liquidity started getting squeezed and fell into deficit mode, helping contain money market rates.
• The government plans to borrow ₹17.2 lakh crore for FY27, higher than market projections, which could put upward pressure on yields without RBI intervention.