New Delhi [India], January 28 : Despite a record liquidity push by the Reserve Bank of India (RBI), transmission of monetary easing across financial markets remains uneven, according to SBI Research's latest Ecowrap report.
The report noted that although the RBI has reduced the repo rate by 125 basis points and undertaken unprecedented liquidity operations during the current fiscal, bond and money market yields have not softened in tandem.
It says "Record net RBI liquidity injection at Rs 5.5 lakh crore in current fiscal has still resulted in asysmetric transmission, highlighting the need to innovate on OMO management as a better signalling device."
SBI Research pointed out that factoring in CRR-related measures, buy-sell swaps and currency leakage, total net liquidity injection in FY26 stands at around Rs 5.5 lakh crore, the highest in the history of India's monetary management.
While transmission to bank lending rates has been relatively faster due to nearly 65 per cent of floating-rate loans being benchmarked to the external benchmark lending rate (EBLR), the response across money markets and government securities has remained uneven.
The report observed that money market rates, including CPs and CDs, declined initially but have firmed up since August 2025, even as policy easing continued. Similarly, 10-year AAA corporate bond yields, after declining till early June, have moved upward thereafter, indicating rising risk premia.
The asymmetry is more pronounced in State Development Loans, where borrowing costs during April-December 2025 remained largely unchanged compared to the previous year, despite large-scale RBI liquidity support.
To improve yield-curve signalling, SBI Research suggested that the RBI should consider conducting open market operations (OMOs) in more liquid benchmark securities, rather than illiquid papers, to ensure effective transmission across market segments.
The report emphasised that OMO strategy must evolve into a stronger signalling mechanism to compress term premia and restore confidence across debt markets.
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