Archive · 29 Jan 2026
SBI Report Urges RBI to Innovate OMO Management
The State Bank of India (SBI) released a report suggesting that the Reserve Bank of India (RBI) should make changes to how it manages open market operations (OMOs).
The RBI has already cut interest rates and injected a lot of money into the market, but this hasn't lowered bond yields as expected.
The SBI report points out that the transmission of these rate cuts to the market has been uneven, especially in state development loans.
To fix this, the SBI suggests that the RBI should focus its OMOs on more liquid bond papers, like the 6.33% 2035 paper.
This could help signal the market more effectively and improve overall sentiment.
The report also notes that the RBI's decision to prepay all borrowed amounts in a specific repo operation is unique and could lead to new strategies in the market.
SBI Research suggests RBI should innovate OMO management for better yield curve signalling.
RBI has cut repo rate by 125 bps and injected Rs 6.6 lakh crore, but yields remain high.
Asymmetrical transmission noted in lending and money market rates, especially in state development loans.
SBI proposes targeting liquid papers like the 6.33% 2035 paper for more effective OMO impact.
RBI's decision to prepay full amount borrowed in 90-day repo is unprecedented and may introduce new bidding strategies.
- Who
- State Bank of India (SBI) Research
- What
- Proposed innovations in RBI's OMO management
- When
- Wednesday (report release)
- Where
- India
- Why
- To improve yield curve signalling and market sentiment
- Organization
- State Bank of India (SBI)
- Report Name
- Ecowrap
- Repo Rate Cut
- 125 basis points
- Liquidity Injected
- Rs 6.6 lakh crore
- Proposed OMO Target
- 6.33% 2035 paper
- Current Yield
- 7.16%
- Report Date
- Wednesday