Archive · 28 Sep 2026
RBI Completes Record ₹1 Lakh Crore Net Bond Sale
India’s central bank has sold a very large amount of government bonds this financial year.
The sale has reached ₹1 lakh crore, the biggest amount in more than ten years.
Selling bonds removes extra money from banks and the wider financial system.
The RBI is doing this because banks received a lot of cash after being allowed to raise dollars through a special window.
That extra cash had pushed short-term interest rates below the RBI’s policy rate.
Investors think the RBI may sell even more bonds or ask banks to keep more money in reserve.
The government also plans to borrow using very long-term bonds, which has made investors more cautious.
The government says its borrowing remains within budget and that longer-term borrowing will reduce the risk of having to refinance debt soon.
The Reserve Bank of India has net sold ₹1 lakh crore in bonds this financial year, its largest annual net sale in more than a decade.
The RBI is withdrawing liquidity after a dollar-raising window for lenders left India’s banking system flush with cash.
Market participants expect the RBI to sell another ₹1-1.5 lakh crore, while some estimate total additional sales of ₹1 lakh crore by December.
The government’s planned issuance of 15-, 30- and 40-year securities has increased selling pressure across the government bond yield curve.
The previous RBI net-sale record was ₹90,000 crore in FY2018, following the government’s demonetisation of ₹500 and ₹1,000 notes.
- Who
- The Reserve Bank of India, the Indian government, banks, investors and bond-market officials.
- What
- The RBI has completed ₹1 lakh crore in net government-bond sales and may conduct further sales to withdraw liquidity.
- When
- The sales have occurred during the current financial year; further sales are expected during October-November and possibly by December.
- Where
- India’s government bond and banking markets.
- Why
- The RBI is removing excess banking-system liquidity after a special dollar-raising window, while the government is managing borrowing and refinancing risks.
Liquidity Tightening Rationale
Bond-Market Pressure Concerns
Need for further RBI action
Liquidity Tightening Rationale
Market participants expect more bond sales or a higher cash reserve ratio to remove excess liquidity and bring overnight rates closer to the policy rate.
Bond-Market Pressure Concerns
Some investors and treasury officials are reducing exposure to long-dated bonds because additional RBI sales could keep yields elevated.
Government’s borrowing strategy
Liquidity Tightening Rationale
The Finance Ministry says borrowing remains within budget and that focusing on long-term securities will increase weighted average maturity and reduce rollover risk.
Bond-Market Pressure Concerns
Investors argue that increased central and state debt issuance could keep the term premium high and has already prompted selling across the yield curve.
Monetary-policy outlook
Liquidity Tightening Rationale
A Reuters poll cited in the report found that most respondents expected tighter monetary policy and a policy-rate hike the following week.
Bond-Market Pressure Concerns
Bond-market participants are focused on the risk that further liquidity withdrawal and supply could flatten the shorter end of the yield curve and limit any relief rally.
- RBI net bond sales
- ₹1 lakh crore during the current financial year
- Previous record
- ₹90,000 crore in FY2018
- Expected additional sales
- ₹1-1.5 lakh crore during October-November, according to one treasury official
- Liquidity background
- A special window allowed lenders to raise dollars and contributed to excess banking-system cash
- Government securities planned
- 15-year, 30-year and 40-year bonds
- Government position
- Net borrowing remains at budgeted levels
- Potential policy impact
- Further bond sales or a higher cash reserve ratio would be consistent with tighter monetary policy