RBI to infuse Rs 15,000 cr liquidity by OMO purchase of G-secs

There is an overall aggregate ceiling of Rs 150 billion for all the securities in the basket put together, RBI said

The Reserve Bank said Friday it will buy government securities via open market operations (OMOs) on March 10 to infuse liquidity of Rs 15,000 crore into the system.

"Based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct purchase of government securities under Open Market Operations (OMOs) for an aggregate amount of Rs 150 billion on March 10, 2016," RBI said in a notification.

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As part of the OMOs, RBI will purchase government securities maturing in 2018 (bearing interest rate of 7.83%), 2020 (8.12%), 2023 (8.83%) and 2025 (7.72%), 2027 (8.28%) and 2030 (7.88%).

There is an overall aggregate ceiling of Rs 150 billion for all the securities in the basket put together, RBI added.

OMOs are market operations conducted by 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.