You are here: Home » Finance » News » Banks
Business Standard

RBI to inject Rs 30k cr into market for financial stability amid Covid-19

The central bank infused Rs 10,000 crore through open market operations on Friday

Topics
Coronavirus | Reserve Bank of India | open market operations

Press Trust of India  |  Mumbai 

The (RBI) will inject liquidity of Rs 30,000 crore through next week to maintain financial stability in the system in the wake of the outbreak.

The RBI has decided to conduct purchase of government securities under (OMOs) for an aggregate amount of Rs 30,000 crore in two tranches of Rs 15,000 crore each in March, the central bank said in a statement.

The auctions would be conducted on March 24 and March 30, it said.

It said, "With the COVID-19 related dislocations, stress in certain financial market segments is still severe and financial conditions remain tight. The RBI's endeavour is to ensure that all markets segments function normally with adequate liquidity and turnover."

The central bank infused Rs 10,000 crore through on Friday.

It will purchase securities with a coupon rate of 6.84 per cent (maturity December 19, 2022); 7.72 per cent (May 25, 2025); 8.33 per cent (July 9, 2026) and 7.26 per cent (January 14, 2029).

The RBI said there is no notified amount against any of these securities within the aggregate ceiling of Rs 15,000 crore set for the operation.

The Reserve Bank reserves the right to decide on the quantum of purchase of individual securities, accept offers for less than or higher than the aggregate amount of Rs 15,000 crore (including due to rounding off) and also to accept or reject any or all the offers either wholly or partially without assigning any reason.

Earlier on Monday, RBI Governor Shaktikanta Das said the regulator has "enough policy tools and stands ready to take any measures" needed to help the economy tide over the impact of the pandemic.

In two liquidity-enhancing measures, Das announced another round of USD 2 billion dollar-rupee swap on March 23, and in another measure, he said the RBI will continue to conduct the long-term repo operations (LTROs) of up to Rs 1 lakh crore as and when the market needs it.

On March 16, the RBI conducted the first dollar-swap for USD 2 billion under which the central bank buys rupee from the market by selling dollars.

On the LTROs, it has already conducted four rounds worth Rs 1 lakh crore operations since February 14, after announcing it at the February 6 policy review.

OMOs are money market tools to suck or inject liquidity into the system. When there is enough liquidity, the RBI resorts to selling of government securities to take out money supply, while it purchases the same when the market needs the money.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, March 20 2020. 18:54 IST
RECOMMENDED FOR YOU
.