The Reserve Bank of India (RBI) today announced it will purchase government securities worth Rs 10,000 crore tomorrow through open market operations (OMO) to infuse liquidity in the cash strapped system.
The OMO auction will alleviate the cash crunch caused due to last minute tax payment as the fiscal year comes to an end on March 31.
Banks have been borrowing heavily from RBI over the past few weeks as liquidity remains tight in the system. Banks borrowing under the Liquidity Adjustment Facility (LAF) stood at Rs 1.61 lakh crore today.
"Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the RBI has decided to conduct Open Market Operations by purchasing the following government securities for an aggregate amount of Rs 10,000 crore on March 30 through multi-security auction," the apex bank said in a statement.
The auction is to be conducted by the bank at its Mumbai office.
"There is an overall aggregate ceiling of Rs 10,000 crore for all the securities in the basket put together. There is no security-wise notified amount," the RBI said.
The auction will be for government securities (G-Sec) maturing in 2017 with a coupon rate of 7.99%, G-Secs maturing in 2018 with a coupon rate of 7.83%, G-Sec maturing in 2021 with an 8.79% coupon rate and G-Secs maturing in 2022 with an 8.08% coupon rate.