The Reserve Bank of India (RBI) announced on December 5, 2025, it will buy government securities worth ₹1 lakh crore in December. This Open Market Operation (OMO) aims to maintain adequate liquidity in the banking system. Additionally, RBI will conduct a 3-year USD/INR buy-sell swap for $5 billion this month to add durable liquidity. These steps come ahead of the third advance tax installment due on December 15, which usually strains liquidity. RBI Governor Sanjay Malhotra explained, "In view of the evolving liquidity conditions and the outlook, the Reserve Bank has decided to conduct OMO purchases of government securities of ₹1,00,000 crore and a 3-year USD/INR Buy Sell swap of $5 billion this month to inject durable liquidity into the system." System liquidity measured by the Liquidity Adjustment Facility (LAF) showed an average surplus of ₹1.5 lakh crore since October. Daily net absorption was ₹2.9 lakh crore in August and fell to ₹0.9 lakh crore in October but improved to ₹1.9 lakh crore in November. As of December 3, net absorption under LAF was ₹2.6 lakh crore. Governor Malhotra reassured markets, saying, "We are committed to providing sufficient durable liquidity to the banking system. We continuously assess the durable liquidity requirements of the banking system due to changes in currency in circulation, forex operations, and reserve maintenance." He clarified the difference between liquidity tools: OMOs provide durable liquidity by buying/selling government securities, while repo operations manage short-term or transient liquidity to keep call rates aligned with the policy repo rate. "It is quite possible that the RBI injects durable liquidity through OMOs while simultaneously withdrawing transient liquidity through VRRR operations," he added. Malhotra emphasized, "The primary instrument of monetary policy is the policy repo rate. Changes in short-term rates are expected to affect long-term rates. The primary purpose of OMOs is to provide sufficient liquidity and not to directly influence G-Sec yields."