New Delhi, Feb. 24 -- In a significant move to address the banking system's severe liquidity constraints, the Reserve Bank of India (RBI) has announced plans to inject USD 10 billion through a foreign exchange swap operation scheduled for February 28.

The central bank disclosed this initiative in a statement released on Friday, marking its second major intervention in recent weeks.

The mechanism involves the RBI purchasing U.S. dollars from commercial banks in exchange for rupees, with an agreement to reverse the transaction after three years.

This operation effectively introduces rupee liquidity equivalent to the dollar purchases into the banking system, which is currently grappling with a substantial deficit of approximately two tril...