SME Times News Bureau | 23 Apr, 2019
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.
The move is to address the liquidity concerns in the country.
"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".
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.