RBI accepts ₹25,000 crore in 2nd OMO sale as banking surplus tops ₹6 lakh crore
Synopsis
With banking-system surplus liquidity at ₹6.05 lakh crore, the RBI's second OMO sale drew bids worth ₹84,982 crore — more than three times the ₹25,000 crore on offer. The central bank's three-phase, ₹1 lakh crore absorption plan is now 75% complete, with one final ₹25,000 crore tranche due on 28 September.
Key Takeaways
The RBI accepted ₹25,000 crore in its second OMO sale on 21 September 2026 .
Total bids reached ₹84,982 crore — over 3× the notified amount — reflecting strong demand.
Banking-system surplus liquidity stood at approximately ₹6.05 lakh crore as of 20 September .
The RBI's three-phase OMO plan totals ₹1 lakh crore ; ₹75,000 crore absorbed so far.
The third and final tranche of ₹25,000 crore is scheduled for 28 September .
No bids were accepted for the 8.28% GS 2027 ; largest allocation went to the 6.10% GS 2031 at ₹11,512 crore .
The Reserve Bank of India (RBI) on Monday, 21 September 2026, accepted bids worth ₹25,000 crore in the second tranche of its open market operation (OMO) sales programme, continuing its effort to drain excess liquidity from the banking system. Surplus liquidity in the system stood at approximately ₹6.05 lakh crore as of 20 September, according to RBI data.
Auction Draws Three Times the Notified Amount
The auction attracted total bids of ₹84,982 crore — more than three times the ₹25,000 crore notified amount — signalling robust demand for government securities even as the central bank pursues liquidity-tightening measures. The strong participation reflects sustained appetite among banks and market participants for sovereign paper at prevailing yields.
Breakdown of Accepted Bids
The RBI accepted ₹11,512 crore for the 6.10% Government Security (GS) 2031 and ₹8,758 crore for the 7.95% GS 2032. Additionally, it absorbed ₹2,300 crore of the 6.75% GS 2029, ₹2,250 crore of the 7.17% GS 2030, and ₹180 crore of the 7.17% GS 2028. Notably, the central bank rejected all bids for the 8.28% GS 2027, suggesting it found the offered yields on that security unfavourable.
What OMO Sales Do and Why They Matter
An OMO sale is a monetary policy instrument through which the central bank sells government securities to banks and institutional investors, withdrawing surplus cash from the financial system. By reducing the pool of excess funds, the RBI aims to exert firmer control over short-term interest rates and prevent an unintended easing of monetary conditions — even as the policy repo rate is held steady.
This is particularly significant because an overhang of surplus liquidity can compress money-market rates below the policy corridor, effectively loosening financial conditions without any formal rate cut. The RBI's action signals a preference for keeping monetary transmission intact.
Three-Phase Plan: Where Things Stand
The current OMO sales are part of a structured ₹1 lakh crore liquidity-absorption plan spread across three tranches. The first tranche of ₹50,000 crore was conducted on 17 September. Monday's second tranche added ₹25,000 crore, bringing the cumulative total to ₹75,000 crore. The third and final tranche of ₹25,000 crore is scheduled for 28 September.
Market participants said the exercise reflects the RBI's intent to gradually normalise liquidity conditions after a sustained build-up of surplus cash, without disrupting bond markets. With demand far outpacing supply in each auction, the programme appears to be proceeding without significant market stress.
Point of View
And they still prefer the safety of sovereign paper even at compressed yields. The RBI's measured, phased approach to liquidity normalisation avoids a bond-market jolt, but the sheer scale of the surplus — ₹6.05 lakh crore — raises a deeper question about whether passive OMO sales alone can sustainably anchor short-term rates. If the surplus rebuilds after the three tranches are done, the central bank may face pressure to either accelerate the pace or revisit the policy stance altogether. The final tranche on 28 September will be a useful signal of how smoothly the exit from accommodation can proceed.
NationPress
21 Sept 2026
Frequently Asked Questions
What is an OMO sale and why is the RBI conducting one?
An OMO (open market operation) sale is when the RBI sells government securities to banks and market participants to withdraw surplus cash from the financial system. The RBI is conducting these sales because banking-system liquidity has risen to approximately ₹6.05 lakh crore, which risks pulling short-term market rates below the intended policy corridor.
How much has the RBI absorbed through OMO sales so far?
The RBI has absorbed ₹75,000 crore across two tranches — ₹50,000 crore on 17 September and ₹25,000 crore on 21 September. A final tranche of ₹25,000 crore is due on 28 September, which will complete the ₹1 lakh crore three-phase programme.
Why were bids so much higher than the notified OMO amount?
Total bids of ₹84,982 crore exceeded the ₹25,000 crore offer by more than three times, reflecting strong institutional demand for government securities at current yields. This level of oversubscription suggests the auction proceeded without market stress and that banks remain comfortable deploying surplus funds into sovereign paper.
Which government securities did the RBI accept bids for?
The RBI accepted bids for five securities: ₹11,512 crore of the 6.10% GS 2031, ₹8,758 crore of the 7.95% GS 2032, ₹2,300 crore of the 6.75% GS 2029, ₹2,250 crore of the 7.17% GS 2030, and ₹180 crore of the 7.17% GS 2028. Bids for the 8.28% GS 2027 were not accepted.
What happens after the three OMO tranches are completed?
Once the three-phase programme concludes on 28 September with the final ₹25,000 crore tranche, the RBI will have absorbed ₹1 lakh crore in total. Market participants will then watch whether the surplus liquidity rebounds and whether the central bank needs to extend or modify its normalisation strategy.
