RBI to buy Rs 40,000 crore govt securities via OMO auction on Thursday

The RBI plans to infuse Rs 2 trillion via an overnight variable rate repo (VRR) auction on Tuesday.

The Reserve Bank of India (RBI) plans to purchase Rs 40,000 crore worth of government securities via open market operation auction on Thursday, against the earlier notified amount of Rs 20,000 crore, the central bank said in a release on Monday.

 

“On a review of current and evolving liquidity conditions, the aggregate amount of OMO purchase has now been revised to Rs 40,000 crore,” the release said.

 

The RBI plans to purchase 7.17 per cent GS 2030 maturing on April 17, 7.18 per cent GS 2033 maturing on August 14, 7.10 per cent GS 2034 maturing on April 8, 7.54 per cent GS 2036 maturing on May 23, 7.18 per cent GS 2037 maturing on July 24.

 

 

“They did not announce additional measures in the monetary policy review last week but did promise to look after the liquidity situation. The deficit is widening again, which will be taken care of through the VRR and this additional amount in OMO will take care of the core liquidity deficit,” said a dealer at a private bank.

 

The RBI plans to infuse Rs 2 trillion via overnight variable rate repo auction on Tuesday.

 

“Now that rate cut has happened, we need surplus liquidity for monetary transmission,” said a dealer at a state-owned bank.

 

During the monetary policy review announcement, RBI Governor Sanjay Malhotra had assured to provide sufficient liquidity in the banking system though no new measures were announced on liquidity in the policy.

 

“The Reserve Bank is committed to provide sufficient system liquidity. We have taken a number of steps in this regard, we will continue to monitor the evolving liquidity and financial market conditions and proactively take appropriate measures to ensure orderly liquidity conditions,” Malhotra said.

 

The net liquidity in the banking system liquidity has remained in deficit for the past eight consecutive weeks ending February 7. The net liquidity was in deficit of Rs 1.33 trillion on Sunday, latest data by the RBI showed.