RBI to infuse Rs 10,000 cr liquidity via OMO route on March 1
Mumbai: The Reserve Bank will infuse additional liquidity by pumping in Rs 10,000 crore in the market through open market operations (OMOs) on March 1.
"Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing...Government securities for an aggregate amount of Rs 10,000 crore on March 1, 2013," it said in a statement on Monday.
As part of the OMOs, the RBI will purchase government securities maturing in 2014 (bearing interest rate of 7.32 percent), 2016 (7.59 percent), 2022 (8.15 percent) and 2025 (8.20 percent).
The auction, it added, would be held through the multi-security auction using the multiple price method.
RBI said, it reserves the right to decide on quantum of purchase, accept less than aggregate amount of Rs 10,000 crore, purchase marginally higher than aggregate amount due to rounding effects and accept or reject any or all of the offers either wholly or partially without assigning any reason.
OMOs are open market operations conducted by the RBI by way of sale/purchase of government securities to/from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis.
If there is excess liquidity, RBI resorts to sale of securities and sucks out the rupee liquidity. Similarly, when the liquidity conditions are tight, the RBI buys securities from the market, thereby releasing liquidity into the market.
It asked the eligible participants to submit their offers in electronic format between 10.30AM-12Noon on March 1, while physical offers should be submitted at its office in Fort.
The result of the auction will be announced on the same day and payment to successful offerers will be made during banking hours on March 4, 2013.