India's central bank on Friday announced an open market sale of bonds, one of ​the most potent liquidity-draining tools, hours after ​its chief said in a media interview that all options remained on the ​table.The Reserve Bank of India (RBI) will sell bonds worth an aggregate of 1 trillion rupees ($10.47 billion) in the next fortnight starting on September 16.In the first tranche on September 17, the RBI will sell bonds maturing from fiscal 2029 to fiscal 2032 worth ‌500 billion rupees, ⁠and will ⁠follow it up with 250 billion rupees each of sales each on September 21 and September 28.Earlier in the day, RBI Governor ​Sanjay Malhotra said the central bank has enough tools to manage liquidity, other than VRRR (variable rate reverse repos), such as ​open market operations or FX swaps, and "nothing is off the table."India's banking system is flush with surplus cash after lenders raised a much larger-than-expected $127 billion under the RBI's special forex mobilisation scheme, which boosted central bank reserves ​to an all-time high. The surplus averaged around 10.25 trillion rupees in ⁠September, nearly ‌3.8% of deposits.However, the excess rupee liquidity pushed overnight rates below the floor of ​the monetary policy ​corridor and prompted the central bank to step up liquidity absorption at a time ⁠when elevated oil prices threaten to add to inflationary pressures.The RBI had ​last sold bonds in the secondary market in September 2024, while it ​had conducted simultaneous purchase and sale of bonds in fiscal 2021 and 2022. Traders said the central bank had last conducted a scheduled debt sale through the auction route in October 2014.Bets of a stringent liquidity absorption tool rose after the central bank faced twin hurdles, with banks resisting longer-duration operations and dollar-rupee swaps raising hedging costs.The RBI used two tools this week to drain liquidity: a longer-tenor VRRR and dollar-rupee sell-buy swaps, ‌but both drew limited interest."The central bank should have continued with sell/buy swaps, and complimented it with an incremental CRR (cash reserve ratio) hike, especially on deposits garnered under the FX ​scheme," said VRC ​Reddy, treasury head at Karur ⁠Vysya Bank."We felt open market sale of bonds should have been used as the last option."Traders have highlighted such debt sales could raise government borrowing costs further at a time when surging oil prices and Treasury ​yields have already pushed the 10-year benchmark bond yield up by 26 bps in the last four weeks.The central bank could use a market stabilisation scheme, but only as a last resort, with a CRR hike preferred, as bond yields should not get hampered much through these tools, a person familiar with New Delhi's thinking said, requesting anonymity as he is not authorised to speak to media.