RBI to inject Rs 600 bn more liquidity by Jan via open market operations

The OMO purchase in the present fiscal year will be around Rs 2.5 trillion

The Reserve Bank of India (RBI) on Tuesday announced a massive bond buyback programme for the current fiscal year to address the liquidity deficit — a move that’s expected to raise bond prices and boost bank treasury profits when lenders need capital.

The announcement came after the markets closed.

In a notification on its website, the central bank said it would be injecting Rs 500 billion of liquidity in December through its open market operations (OMO), in which it buys bonds from the secondary market, against Rs 400 billion planned earlier. 

This will be done by increasing the remaining two OMO auctions to