RBI set to inject Rs 45,000 crore into banking system on Vijay Diwas
New Delhi (The Uttam Hindu): The Reserve Bank of India (RBI) has prepared a big plan to revive the country's banking system and strengthen the rupee. The central bank has drawn up an investment plan of Rs 45 thousand crore (about US$ 5 billion) to increase the flow of cash in the market. RBI has chosen the date of December 16 to execute this mega plan. This date holds historical significance for India because on this day in 1971, India won over Pakistan, which the entire country celebrates as 'Vijay Diwas'. Now on this day RBI is going to take a big step on the financial front.
According to information released by the Reserve Bank of India on Monday, a US$5 billion US dollar-Indian rupee buy/sell swap auction will be held on December 16th. The primary objective of this exercise is to inject additional liquidity into the financial system. Under this auction, banks will sell dollars to the RBI, and the RBI will provide Indian rupees to the banks. This will increase the availability of rupees in the market, strengthening the banking system and is expected to support the rupee.
The central bank clarified that this will be a simple foreign currency swap process. The RBI will conduct an auction on December 16th for a period of 36 months. The terms of this deal will be that banks will be required to buy back an equal amount of US dollars at the end of the swap period. The minimum bid size for participating in the auction is US$10 million, after which it can be increased in multiples of US$1 million.
In addition to the dollar-rupee swap, the RBI has made another major announcement to maintain smooth cash flow. The Reserve Bank will also inject money into the market through the purchase of government securities. To this end, auctions for government securities totaling ₹1 lakh crore will be held in two phases on December 11 and 18, 2025. Auctions for ₹50,000 crore will be held on both dates. The RBI has assured that it is continuously monitoring market conditions and liquidity and will take appropriate further action if necessary.