The Reserve Bank of India (RBI) today announced it would purchase government securities worth Rs 12,000 crore on Friday through open market operations (OMOs) to boost liquidity in the economy.
"Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, RBI has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on January 6, 2012, through a multi-security auction...," the apex bank said in a statement.
The auction is to be conducted by the bank at its Mumbai office.
The auction will be for government securities (G-Sec) maturing in 2017 with a coupon rate of 8.07%, G-Secs maturing in 2021 with a coupon rate of 7.8%, G-Sec maturing in 2022 with an 8.13% coupon rate and G-Secs maturing in 2027 with an 8.26% coupon rate.
"There is an overall aggregate ceiling of Rs 12,000 crore for all the securities in the basket put together. There is no security-wise notified amount," the RBI said.
RBI Deputy Governor Subir Gokarn had said that liquidity is likely to be under pressure for some more time due to factors like advance tax payment.
OMOs are the "first preference" of the RBI for injecting liquidity into the system and there is an opportunity to raise up to Rs 2.74 lakh crore through the window as banks' government bond holdings stand at 29%, 5% over the prescribed SLR cap of 24%, he said.
