Reserve Bank of India has completed a net debt sale of ₹1 trillion in FY2026. This is the largest such operation in more than 10 years. The central bank acted to absorb surplus liquidity created by strong foreign inflows and excess cash in the banking system.
Market experts expect bond sales to rise by another ₹1–1.5 trillion by December 2026. The last major sale was in FY2018 when ₹900 billion was withdrawn after demonetisation.
The operation has already lifted overnight rates closer to the policy rate of 6.50%. Bond yields across maturities are expected to climb further as investors adjust to tighter liquidity. Equity markets may face short term volatility while foreign exchange reserves remain supported by dollar inflows.
Analysts see a possible increase in the cash reserve ratio by 0.50% to absorb liquidity. A policy rate hike of 25 basis points is widely anticipated in the upcoming review.
The government has shifted borrowing by reducing 3‑year and 5‑year debt while increasing 15‑year, 30‑year and 40‑year securities. States are expected to borrow more, keeping term premiums elevated. Officials maintain that net borrowing remains within budgeted levels, signalling fiscal discipline.
