RBI Announced Rs. 1 lakh Crore OMO Purchase of Government Securities to Enhance Liquidity

For banking operations, liquidity is more important. To maintain liquidity and financial conditions, the Reserve Bank of India (RBI) has declared that it will hold open market operation (OMO) purchase auctions of Government of India securities totaling Rs. 1,00,000 crore in two tranches.

To alleviate any liquidity squeeze that the banking system may experience as a result of outflows caused by GST payments and advance tax, the RBI has chosen to conduct open market operation (OMO) purchase auctions of government securities in two tranches of Rs. 50,000 crore each, to be held on March 9 and March 13.

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These auctions, which total Rs. 1 trillion, are also designed to prevent liquidity shortages from pushing up government securities yields in the weeks leading up to the end of the fiscal year.

The RBI announced that it will acquire a variety of government securities at the March 9 auction via a multi-security auction employing the multiple price approach. The securities are made up of 6.01% GS 2030, 6.10% GS 2031, 7.18% GS 2033, 6.19% GS 2034, 6.33% GS 2035, 6.92% GS 2039 and 7.30% GS 2053, reported by ANI.

Between the hours of 9:30 and 10:30 am on March 9, qualifying participants were invited to submit their bids online using the RBI Core Banking Solution, E-Kuber system. Physical offers may be sent to the Financial Markets Operations Department before 10:30 am in the event of a system malfunction. Successful auction participants must make sure that securities are available in their SGL accounts by midday on March 10, according to the RBI statement, and the auction results will be released on the same day, ANI reports further.