RBI completes ₹25,000 crore OMO sale as bids reach ₹84,982 crore

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RBI OMO sale auction

Highlights

RBI completed a ₹25,000 crore OMO sale, while total bids reached ₹84,982 crore; settlement is due on September 22, 2026.
Demand for long-term paper remained strong, with allocations of ₹11,512 crore and ₹8,758 crore in the 2031 and 2032 government securities, respectively.
The cut-off yields were set at 6.8753% for the 6.10% GS 2031 and 7.0083% for the 7.95% GS 2032, with strong interest from market participants.

This article was translated from the original. Read the original version by our correspondent here.

Auction results and issue details

As reported by the Reserve Bank of India, according to RBI press release 2026-2027/1157, the central bank accepted the full notified amount of ₹25,000 crore, while participants submitted bids with a total face value of ₹84,982 crore. Settlement for this OMO sale auction is scheduled for September 22, 2026.

At the security level, 20 bids were received for the 8.28% GS 2027, but no allocation was made. Of the ₹3,205 crore in bids for the 7.17% GS 2028, ₹180 crore was accepted, while ₹2,300 crore was accepted for the 6.75% GS 2029 against bids of ₹7,945 crore.

Of the ₹9,820 crore in bids for the 7.17% GS 2030, ₹2,250 crore was accepted. For the 6.10% GS 2031, ₹11,512 crore was accepted against demand of ₹31,780 crore, while ₹8,758 crore was accepted for the 7.95% GS 2032 against demand of ₹29,150 crore.

The cut-off yields were 6.1320% for the 7.17% GS 2028, 6.6862% for the 6.75% GS 2029, 6.7740% for the 7.17% GS 2030, 6.8753% for the 6.10% GS 2031, and 7.0083% for the 7.95% GS 2032. Competitive bids at the cut-off price were partially allotted at 79.58% and 79.68% for the 6.10% GS 2031 and 7.95% GS 2032, respectively.

Impact on the bond market and liquidity

Accepted bids focused on long- and medium-term government securities in this auction indicate that the RBI is managing liquidity in the market and making targeted interventions across different parts of the yield curve. No acceptance in the 2027 bond and large allocations in the 2031 and 2032 securities indicate that demand was tilted more towards relatively longer-duration paper.

Through OMO sales, the central bank withdraws cash from the banking system, so such actions affect short-term liquidity conditions, government bond yields, and investors' pricing expectations. The high total bid amount also shows that market participants' interest remains strong, even though the RBI limited acceptance to the notified amount.

Our previous report highlighted how strong inflows into FCNR(B) deposits shifted banking-system liquidity from a deficit to a surplus, increasing the RBI's challenge of absorbing excess cash. In that context, we also highlighted the support provided to foreign exchange reserves and the balance of payments, as well as the short-term pressure on interest rates, bank margins, and credit deployment.

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