The Reserve Bank of India (RBI) has doubled down on its efforts to infuse liquidity into the banking system when it announced a series of measures to plug the gap on Monday.

Liquidity shortage in the system as evident by banks’ borrowing from the RBI had last week crossed the ₹3-lakh-crore mark to touch ₹3.16 lakh crore. It subsequently moderated to ₹2.82 lakh crore as on January 24.

The RBI had announced daily variable rate repo auctions (VRR) on January 15. However, it did not make a significant impact.

On Monday, the RBI under new governor Sanjay Malhotra said it will purchase Government of India (GS) securities through open market operations or OMO.

The purchases will be conducted in three tranches of ₹20,000 crore each to be held on January 30, February 13 and February 20.

On January 30, the RBI will buy 7.59 per cent GS 2029, 7.18 per cent GS 2033, 7.10 per cent GS 2034, 6.79 per cent GS 2034 and 7.18 per cent GS 2037.

The RBI will also undertake a 56-day VRR auction for ₹50,000 crore. This will be held on February 7, 2025.

Due to this step, the cash will remain with banks for a longer period unlike daily VRR auction where it has to be reversed on the next day.

The RBI also said that it will conduct US dollar/INR buy/sell swap auction of $5 billion for a tenor of six months on January 31, 2025.

In this operation, the central bank buys dollars (as a result of which rupee liquidity is infused) and returns them after six months.

Bond market circles said that the measures announced by the RBI could lead to softening of bond yields.

Yields on the benchmark 10-year security closed at 6.68 per cent on Monday.