The Reserve Bank of India (RBI) is opening the floodgates to keep the banking system from drying up.1 On Tuesday, December 23, 2025, the central bank announced it would pump nearly ₹3 trillion (₹3 lakh crore) into the market.2
The thing is, the RBI has been fighting a “war on two fronts.” Last week, it aggressively sold dollars to stop the rupee from crashing past 91 per dollar (it’s now back around 89).3 But every time the RBI sells a dollar, it sucks a rupee out of the system. Or nothing. Let’s be real, between that and the year-end rush for cash, the banks were starting to feel the squeeze. Those too.
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The “Liquidity Injection” Schedule
The RBI isn’t just dumping cash all at once; it’s a surgical operation spread over the next month.4
| Operation Type | Amount | Key Dates (2025-26) |
| OMO Purchase (Bonds) | ₹2,00,000 Crore | Dec 29, Jan 5, Jan 12, Jan 22 |
| USD/INR Buy-Sell Swap | 10 Billion (~₹90k Cr) | January 13 |
| Total Infusion | ~₹2.9 – ₹3.0 Trillion | By end of Jan 2026 |
Why the Market is Rallied
And here’s the kicker: bond yields were spiking because everyone was worried about a cash crunch. As soon as this announcement hit, the 10-year benchmark yield dropped from 6.63% to around 6.56%.5
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The “Malhotra” Guarantee: RBI Governor Sanjay Malhotra had already promised “ample liquidity” after the 25bps rate cut earlier this month.6 This move is him putting his money where his mouth is.
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The Remittance Factor: For NRIs, the rupee’s defense at 89-90 is a “sweet spot”—strong enough to keep the economy stable but weak enough to make sending money home attractive.
The “Ongoing” Fiscal Worry
It’s an ongoing situation where the RBI is clearing the path for the government’s massive borrowing plan in Q4. With ₹5.5 trillion in bond redemptions coming up next year, the banks need this extra “durable liquidity” just to keep the lights on and the credit flowing.
Essentially, the RBI just gave the market a very expensive Christmas present to ensure the New Year doesn’t start with a “liquidity hangover.”
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End…
