RBI to Inject Over Rs. 2 Lakh Crore in the Banking System Liquidity

The Reserve Bank of India (RBI) is about to take a strategic move where the bank will inject over Rs. 2 lakh crore (23 Billion USD) into the liquidity of the banking system. Following an assessment of the existing liquidity and financial situation, the choice was made on Friday.

The central bank has set up a 90 day Variable Rate Repo (VRR) transaction of Rs. 25,000 crore for January 30. The interest rate in a VRR is decided by market bids rather than being predetermined and banks may use an auction to borrow money for the short term.

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On February 4, 2026, there will be a 3 year USD/INR buy-sell swap auction of 10 billion USD (Rs. 91,000 crore), as well as open market purchases of government securities totaling Rs. 1 lakh crore.

Under this scheme, the banks would sell dollars to the RBI for rupees and concurrently commit to purchasing those dollars back at a predetermined future exchange rate. In other words, the RBI is effectively borrowing rupees for a certain period while simultaneously controlling exchange rate risk and increasing market liquidity without making any long-lasting changes to foreign exchange reserves.

Last but not least, the central bank will conduct open market operations (OMO) to purchase government securities totaling Rs. 1 lakh crore. The exercise will take place in two tranches of Rs. 50,000 crore each, on February 5 and 12.

Every procedure should have precise instructions, according to the RBI. According to the press release, “The Reserve Bank will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions.”