Indian Bond Yields Stay Range-Bound as RBI Steps Up Record Bond Purchases

Indian government bond yields have remained steady despite heavy supply pressures. Strong intervention by the Reserve Bank of India is offsetting foreign outflows and rising debt issuance.

Indian bond yields remained stable in December 2025 as RBI stepped up bond purchases worth ₹500 billion, countering foreign investor selling and rising government borrowing.

The benchmark 10-year government security has traded in a narrow band of 6.57 percent to 6.61 percent, according to market data reported on 9 December. Despite mounting supply and foreign investor exits, yields have not risen sharply due to aggressive intervention by the central bank. This marks one of the strongest bond-support phases by the RBI in recent years.

What Is Driving Stability in Indian Bond Yields Right Now?

Under normal conditions, heavy government borrowing and foreign selling would push yields higher. However, Indian bond yields have remained steady because of the RBI’s open market operations.

During the current week, the RBI announced bond purchases worth ₹500 billion, including the widely traded 6.33 percent government bond maturing in 2035. The details of these purchases are published in the RBI Weekly Statistical Supplement, released every Friday and accessible on rbi.org.in → Publications → Weekly Statistical Supplement.

These operations are aimed at ensuring orderly market conditions and managing surplus liquidity.

RBI’s Record Bond Buying Offsets Supply and Foreign Outflows

Market participants say the pace of bond buying this financial year is already record-breaking. Dealers estimate that cumulative RBI purchases could reach ₹1 trillion to ₹2 trillion by the end of March 2026 if supply pressures continue.
 

Earlier buyback operations briefly triggered rallies after the RBI paid above-market prices, reinforcing confidence that the central bank will act decisively to prevent sharp yield spikes.

According to a Reuters report dated 9 December 2025, foreign investors sold index-linked Indian bonds at a six-month high, adding pressure that would normally lift yields. 

Previous Developments: How RBI Has Used Bond Purchases Earlier?

RBI has relied on bond buying during multiple stress periods to stabilise the market.
 

In its RBI Annual Report 2024–25, published in August 2025 and available on rbi.org.in → Publications → Annual Reports, the central bank stated that bond market stability is critical for smooth government borrowing and effective monetary transmission.

The report also warned that excessive yield volatility could disrupt credit pricing and fiscal planning.

What Analysts and Market Participants Are Saying

Bond traders say RBI’s strong presence has reassured investors at a time when global uncertainties, rising state borrowings and foreign outflows are weighing on sentiment. However, analysts caution that yields could become volatile if inflation rises again or if RBI support slows.

Foreign investors remain cautious due to global rate uncertainty and currency pressures, but RBI’s actions have limited near-term downside risks.

For retail investors trying to understand why yields move and how RBI policy affects debt markets, the LoansJagat article provides useful context.

Conclusion

Indian bond yields are holding steady due to RBI’s aggressive bond purchases. Continued central bank support will be crucial as supply pressures and global risks persist.

Market participants will closely track RBI’s liquidity operations, state borrowing plans and inflation data to gauge whether yield stability can be sustained into early 2026.