With reference to the Reserve Bank of India's liquidity management measures, consider the following statements: 1. The bonds being sold have maturities ranging from fiscal 2030 to fiscal 2040. 2. The Cash Reserve Ratio (CRR) requirement is set to increase to 95% of daily balances. 3. The RBI is selling ₹250 billion in bonds to drain liquidity from the system. Which of the statements given above is/are correct?

RBI to sell ₹250 billion in bonds as banks must maintain 99% CRR

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 10 October 2026

Monetary policy and liquidity management: a core GS3 topic regarding RBI's tools to control inflation.

Why in news

The Reserve Bank of India (RBI) announced the sale of ₹250 billion in bonds to drain liquidity as the Cash Reserve Ratio (CRR) requirement for banks is set to increase from 90% to 99% starting October 16.

Background

The RBI is selling ₹250 billion ($2.58 billion) in bonds with maturities ranging from fiscal 2030 to fiscal 2035. The CRR requirement will rise to 99% of daily balances starting October 16, with liquidity expected to be fully absorbed by March.

Facts for Prelims

FactRBI bond sale amount: ₹250 billion ($2.58 billion)
FactBond maturity range: Fiscal 2030 to fiscal 2035
FactNew CRR requirement: 99% of daily balances

Prelims practice question

With reference to the Reserve Bank of India's liquidity management measures, consider the following statements:

The bonds being sold have maturities ranging from fiscal 2030 to fiscal 2040.
The Cash Reserve Ratio (CRR) requirement is set to increase to 95% of daily balances.
The RBI is selling ₹250 billion in bonds to drain liquidity from the system.

Which of the statements given above is/are correct?

(a)1 only
(b)3 only
(c)1 and 3 only
(d)1, 2 and 3

Show answer

Answer: (b) 3 only — Statement 3 is correct. Statement 1 is incorrect: The bond maturities range from fiscal 2030 to fiscal 2035. Statement 2 is incorrect: The CRR requirement is set to increase to 99%.

For Mains

Q. Analyze how the Reserve Bank of India utilizes liquidity management tools like bond sales and CRR adjustments to achieve monetary stability.

Dimensions to cover in your answer

Liquidity-solvency trade-off: Impact of high CRR on commercial bank lending capacity and credit availability
Monetary transmission: Effectiveness of bond-based liquidity drainage in controlling inflation vs. interest rate parity

Keywords: Liquidity Management · Cash Reserve Ratio · Monetary Policy · Open Market Operations · Bond Yields

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