The Reserve Bank today said it will infuse Rs 8,000 crore into the financial system by purchasing government securities on January 4.
"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 the following government securities for an aggregate amount of Rs 8,000 crore on January 4, 2013 through multi-security auction," RBI said in a statement.
The central bank will auction three government securities with maturities in 2022, 2025 and 2027.
OMOs are conducted by RBI by way of sale/purchase of government securities to/from the market, to adjust the rupee liquidity conditions.
If there is excess liquidity, RBI resorts to sale of securities and sucks out the funds from the financial system. Similarly, when the liquidity conditions are tight, RBI buys securities from the market, thereby, releasing liquidity into the market.