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RBI to infuse Rs 8,000 cr through OMO on Dec 21

Under the OMO, RBI will auction three govt securities with maturity in 2018, 2020 and 2026

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The of India (RBI) today said it will infuse Rs 8,000 crore into the system by purchasing on Friday as part of measure.

The decision comes hours after decided to keep as well as (CRR) unchanged.

"Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct (OMO) by purchasing government securities for an aggregate amount of Rs 8,000 crore on December 21, 2012 through multi-security auction," the central bank said in a statement.

Although RBI did not reduce the in today's policy review, it has decided to inject required liquidity through OMO operation.

As part of the OMO operation, the RBI will auction three government securities with maturity in 2018, 2020 and 2026.

There has been some tightening on the liquidity front due to advance tax outgo. Following this, the banks' borrowing from the RBI has gone up to Rs 1,51,770 crore today from 1,46,300 crore.

Earlier in the day, RBI Deputy Governor Subir Gokarn said the current high borrowing by banks is the result of large cash balance with the government and the advance tax payout.

He assured, however, that RBI will not let the liquidity condition go out of hand, and said if there is a need to do more OMOs it will be done.

Since the beginning of this month, RBI had done two Open Market Operations of Rs 12,000 crore each.

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