The Reserve Bank of India raised trading targets for the country’s bond market makers in a bid to boost liquidity, driving a surge in activity in the 10-year benchmark security, according to people familiar with the development.

Each of the 21 primary dealers must trade at least 4 lakh crore ($41.8 billion) of bonds in the financial year starting April, up 48 per cent from last year’s target, the people said, asking not to be identified as the matter is private. The RBI notified primary dealers of the targets in writing, the people said.

The higher quotas are already feeding through to market activity. Daily trading volumes in the 10-year bond — the nation’s most liquid debt security —  jumped 40 per cent since April compared with March, data compiled by Bloomberg show. Total bond trading rose 15 per cent over the same period.

The move underscores the RBI’s push to deepen liquidity in sovereign debt, a priority Governor Sanjay Malhotra highlighted this month. That may keep volumes elevated through the year, helping cushion the market as investors contend with volatility from swings in the rupee and global oil prices.

The central bank sets these goals for primary dealers at the start of April as part of its operational guidelines. They are determined as a percentage of average trading volumes over the previous three years. A failure to meet the target is considered a violation of the RBI’s guidelines, and can potentially attract penal action.

Market liquidity declined toward the end of the last fiscal year, which was visible in the wider gaps between prices quoted by buyers and sellers of government securities, data from the Clearing Corp. of India show.

Trading activity suffered because of tighter banking liquidity, and the volatility caused by surging oil prices, a weak rupee, and foreign fund outflows after the Iran war began, according to CCIL. 

A spokesperson for the RBI did not respond to request for comment. The Primary Dealers’ Association of India didn’t reply to an emailed request for a comment.

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Published on May 18, 2026