OMO, deposit accretion picking up: RBI

The country's apex bank, the Reserve Bank of India (RBI), today said that Open Market Operations (OMO) in the bond market is more a monetary policy tool and not a debt management instrument.

"It is more of a monetary policy tool and not a debt management instrument," a senior RBI official told reporters here today. OMO is not being used to influence bond yields, he said.

"OMO is done in a more enduring manner and not to influence the yield curves," the official said. 

On the statutory liquidity ratio (SLR) now at 24 per cent, the RBI's Deputy Governor, Subir Gokarn, said the apex bank presently feels that there is no need to tinker with it. 

SLR is the amount of liquid assets, such as cash, precious metals or other short-term securities, that a financial institution must maintain in its reserves.

The RBI had reduced the ratio from 25 per cent to 24 per cent in December 2010.

On January 25 (2011), the RBI, in its efforts to combat the prevailing high inflation, lifted its key short-term rates -- repo and reverse repo rates -- by 0.25 per cent each to 6.5 per cent and 5.5 per cent, respectively.