RBI to buy Govt bonds worth Rs.15,000 cr via OMO

The Dollar Business Bureau

In order to infuse liquidity in to the banking system, the Reserve Bank of India (RBI) will purchase government bonds amounting to Rs.15,000 crore via open market operations (OMO) next week. The latest announcement comes barely a week after the bank bought government securities worth Rs.15,000 crore through OMO.

In a statement released on Friday, the RBI said, “On the basis of recent assessment of prevalent and growing liquidity conditions, the Bank has decided to buy government securities under OMO for an average amount of Rs.150 billion on May 31.”

There is a total aggregate limit of Rs.150 billion for all the government securities taken together.

Purchase of extra securities would help the bank to release the same amount of money into market and ease liquidity situation, it added.

“It can buy slightly higher than the average amount due to rounding-off impact and other related factors,” the Central Bank said.

The Bank further said it has the right to accept or decline any or all the offers without mentioning the reason.

The outcome of the auction will be declared on the same day and successful participants will get the payment on May 26.

Open market operations or OMO is referred to an activity of buying and selling of government securities in the open market to contract or expand the amount of money into the banking system of the country, facilitated by the Central Bank.