RBI to infuse Rs 1.25 trillion worth of liquidity via bond purchases

The Reserve Bank of India will purchase government bonds worth 1.25 trillion rupees ($14.71 billion) via open market operations over four tranches in May, its latest measure to infuse liquidity into the banking system. 

The first tranche of Rs 50,000 crore is scheduled for May 6, followed by three tranches of Rs 25,000 crore each on May 9, 15 and 19, respectively. 

The announcement on Monday is the RBI's latest liquidity infusion measure, with 1.2 trillion rupees added in April via debt purchases and FX swaps. It is scheduled to buy bonds worth Rs 20,000 crore on Tuesday, its last tranche for the current month.

The central bank had also reduced the repo rate for a second consecutive time and changed its stance to "accommodative" earlier this month. 

The RBI is expected to keep sufficient surplus in the banking system to ensure policy transmission, and is looking at a level of around 1% of deposits, Governor Sanjay Malhotra said in a press conference after the monetary policy decision on April 9. 

The surplus works out to be in the range of Rs 2.20 trillion to Rs 2.50 trillion. 

The daily average surplus for the week ended April 25 was Rs 80,900 crore, down from Rs 1.78 trillion in the previous week, per central bank data.