Liquidity Absorption Continues: RBI’s Three‑Phase OMO Plan Nears Final Stage

The RBI’s ongoing liquidity‑absorption drive is progressing as outlined in its three‑phase OMO roadmap.

By 20 September, the central bank estimated that the banking system still held excess liquidity of roughly ₹6.05 lakh crore. The OMO mechanism allows the RBI to pull this surplus cash out of circulation by selling government securities to the market.

With the second tranche of ₹25,000 crore now completed, the RBI is poised to launch the final tranche of the same size on 28 September. Successful execution will bring the total amount of securities sold under the current programme to ₹1 lakh crore.

The systematic withdrawal of liquidity aims to tighten short‑term rates, improve the transmission of monetary policy, and support financial stability in a period of abundant cash.