Mumbai: Further addressing the liquidity concerns in the country, the Reserve Bank of India on Tuesday said it will buy government securities worth Rs 25,000 crore next month through two auctions of Rs 12,500 crore each.
Open market operations (OMOs) are conducted by the RBI by sale or purchase of government securities (g-secs) to regulate money supply in the market.
The sale or buying of g-secs infuses or reduces liquidity. OMOs like repo rate, cash reserve ratio and statutory liquidity ratio are monetary policy tools to balances inflation.
“Based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, RBI has decided to conduct purchase of government securities under (OMOs) for an aggregate amount of Rs 25,000 crore in May 2019 through two auctions of Rs 12,500 crore each,” the apex bank said.
“The first auction of Rs 12,500 crore will be conducted on May 2, 2019.”
The date of the other auction was not announced. RBI also added that the OMO amount of Rs 25,000 crore was “indicative and RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions”.