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The Reserve Bank of India has announced that it will inject Rs 40,000 crores into the system in November through the purchase of government securities in order to meet festive season demand for funds.
The central bank had already infused Rs 36,000 crore into the system in the month of October through open market operation (OMO).
The Reserve Bank said in a press release, “Based on an assessment of the durable liquidity needs going forward, RBI has decided to conduct the purchase of Government securities under OMOs for an aggregate amount of Rs 40,000 crore in the month of November 2018.”
RBI added that the auction dates and the government securities to be purchased in respective auctions would be communicated in due course. As per the RBI’s statement, “The OMO amount stated is indicative and RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions.”
The Reserve Bank of India (RBI) had earlier stated that the system liquidity would move into deficit in the second half of 2018-19 and evolving liquidity conditions would determine its choice of instruments for both transient and durable liquidity management.
