India’s central bank announced on September 11 the sale of 1 trillion rupees in government bonds through open market operations, its first net bond sale since September 2024. The sales will occur across three tranches: 500 billion rupees on September 17, followed by 250 billion rupees each on September 21 and September 28. Surplus liquidity in India’s banking system has reached a record 10.25 to 11 trillion rupees, pushing overnight interest rates below the monetary policy corridor floor. The benchmark 10-year sovereign bond yield climbed to 7.035% following the announcement, signaling further upward pressure on yields. This 1 trillion rupee drain represents roughly 10% of the excess liquidity, with the RBI holding approximately 23 trillion rupees in government securities for potential additional operations.
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