(HT)
The Reserve Bank of India’s (RBI) holdings of Indian government securities climbed to a record in absolute terms following aggressive debt purchases, but analysts anticipate a reduction as the year progresses.
The RBI’s bond holdings rose to 12.78% of the outstanding issuances as of March-end from 10.55% at December-end, according to central bank data released on Wednesday.
In absolute terms, this amounts to approximately 14.88 trillion rupees ($173.55 billion), a record high, marking an increase of ₹2.83 lakh crore in the January-March quarter.
The central bank had purchased bonds worth ₹2.45 lakh crore via open market operations (OMOs) and an additional ₹38,800 crore through secondary market transactions in the quarter.
Analysts noted that the RBI’s holdings might diminish in the coming months as some of the debt matures.
The central bank holds between ₹50,000 crore to ₹1 lakh crore of securities that mature in this financial year.
“Holdings may further go up for the current quarter, but in most cases, OMOs are now behind us, especially after the central bank announced a reduction in cash reserve ratio and a reverse repo,” said VRC Reddy, treasury head at Karur Vysya Bank.
The RBI aims to keep liquidity above 1% of deposits till March 2026, according to Gaura Sen Gupta, chief economist with IDFC First Bank.
To that end, it announced a 100 basis-point reduction in banks’ cash reserve ratio, effective from September to December, in its policy meeting in June.
The RBI also cut its repo rate by 50 basis points and shifted its policy stance to neutral.
