The Reserve Bank of India (RBI) has responded to tight liquidity conditions in the banking system by announcing a significant reduction in the government's treasury bill sales and introducing a new selection of bonds for the Centre's buyback operations. This move aims to alleviate cash constraints for banks, which have been exacerbated by muted government spending during the ongoing general elections. By reducing the supply of treasury bills and offering bonds for repurchase at acceptable prices, the RBI seeks to inject liquidity into the banking system and ease borrowing costs for banks.
