RBI to infuse Rs 7,000 cr to ease liquidity on Jun 7 via OMO
Mumbai: The Reserve Bank Monday announced it will infuse Rs 7,000 crore in the system on June 7 by buying government securities to ease the liquidity situation.
"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 7,000 crore on June 7, 2013," it said in a statement.
As part of the OMOs, the RBI will purchase government securities maturing in 2017 (bearing interest rate of 8.07 percent), 2022 (8.08 percent), 2024 (7.35 percent) and 2027 (8.26 percent).
The auction, it added, would be held through the multi-security auction using the multiple price method.
OMOs are the 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.