Monthly oxygen budgets for the intermediate waters (100--1000 m) of the Bay of Bengal were constructed based on Modular Ocean Model (MOM) and oxygen data. The model results reveal that the oxygen levels in the oxygen minimum zone (OMZ) of the Bay of Bengal are controlled by physical and the associated biological processes. It results in maintaining low oxygen levels, with no significant seasonal variability, in the subsurface layer throughout the year. Low oxygen levels in the OMZ are sustained during the period of increased supply of organic matter through river runoff by enhanced supply of oxygen by the physical pump and vice versa. Thus, low oxygen levels in the OMZ are maintained by supply of oxygen by the physical pump to meet the demands of the biological processes. The inconsistency observed among oxygen consumption rates derived based on the present oxygen budget, carbon regeneration rate, and oxygen consumption rates computed based on electron transport system technique could be due to inadequate knowledge of seasonal and spatial variability in oxygen consumption in the latter two estimates. The residence time of intermediate waters (OMZ) of Bay of Bengal was computed to be 12 years.