India Bond Traders Urge RBI to Intervene with Debt Purchases and Auction Rule Changes
Indian bond traders have requested the Reserve Bank of India to alleviate market pressure by conducting open market operations to buy government debt and switching to uniform pricing in bond auctions. These measures aim to reduce borrowing costs, lower elevated yields, ease tight liquidity, and restore investor confidence amid market stress.
In response to elevated bond yields and tight liquidity conditions in the Indian debt market, bond traders have urged the Reserve Bank of India (RBI) to step in with proactive measures. They specifically called for the RBI to purchase government securities through open market operations (OMOs), which would inject liquidity and help lower borrowing costs. Additionally, they recommended shifting the auction mechanism to uniform pricing rather than the current multiple pricing system to enhance transparency and investor confidence. These interventions are seen as necessary to alleviate market pressure, support efficient debt financing, and stabilize financial conditions. Recent RBI actions reflect a similar approach, with announced OMO purchases worth ₹80,000 crore in multiple tranches during April 2025 to bolster liquidity and ease volatility. The RBI's active debt purchases and auction adjustments highlight its commitment to maintain orderly functioning of government securities markets amid evolving macroeconomic challenges and tight liquidity constraints.
