The Reserve Bank of India appears to be stepping up support for the government bond market amid surging oil prices, with data showing that an investor category that includes the central bank posted its largest single-session purchase in five years.
The category, which comprises insurance companies, pension funds, corporates and the RBI, bought bonds worth ₹20,285 crore ($2.21 billion) on Wednesday, the highest for this segment since February 2021.
These investors had already bought ₹18,400 billion rupees of bonds on Friday and Monday, clearing house data showed.
Bankers said that big purchases by this category are often seen as a sign of RBI activity in the secondary market.
WHY IT’S IMPORTANT
The surge in purchases suggests the central bank may be intervening in the market to limit upward pressure on bond yields stemming from higher crude oil prices, which has kindled inflation concerns.
India’s bond market was already grappling with excess supply for much of this year prior to the rally in oil prices, leaving sentiment fragile.
Higher government bond yields can ripple through the broader economy by raising borrowing costs for states and companies.
The 10-year bond yield is down 3 basis points at 6.64% on Thursday and is also lower than levels seen before the conflict broke out over the weekend.
Bankers said that bonds have held up despite the nearly 15% surge in Brent crude, indicating significant support from the RBI.
“The secondary market intervention is more effective for the broader market because it allows the central bank to buy liquid, on-the-run securities — freeing up traders’ balance sheets and keeping participants guessing about its next move,” said VRC Reddy, treasury head at Karur Vysya Bank.
The RBI has net bought bonds worth a record 6.86 trillion rupees for the fiscal year till February 20, as per latest data.
Published on March 5, 2026