Why it is in the news
On 18 September 2026 the Reserve Bank of India absorbed ₹2,22,629 crore through a 3-day Variable Rate Reverse Repo (VRRR) auction, and settled the first tranche of an Open Market Operation (OMO) sale of government securities conducted the previous day — the RBI's first outright OMO sales in about nine years. The same morning it ran an underwriting auction for ₹28,000 crore of fresh government borrowing. A central bank that spent the previous eighteen months easing is now running the largest liquidity-withdrawal operation of the cycle without changing its policy repo rate.
The exam angle
Issue: Can a central bank credibly hold a neutral policy stance while conducting the most aggressive liquidity withdrawal of its cycle? The September 2026 operations force the question of whether stance and liquidity are two instruments or one, and whether an unchanged repo rate still communicates anything when the quantity of reserves is being moved by trillions.