The Reserve Bank of India said it will inject Rs 12,500 crore into the system through purchase of government securities on Thursday to increase liquidity. The purchase will be made through open market operations.
“Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of...government securities under OMOs for an aggregate amount of Rs 125 billion (Rs 12,500 crore) on Feb. 21, 2019," the RBI said in a release.
The eligible participants should submit their offers in electronic format on the RBI core banking solution (E-Kuber) system on Feb.21.
The result of the auction will be announced on the same day and payment to successful participants will be made on the following day, RBI said.
OMOs are financial tools to either inject or suck out liquidity from the system. When the liquidity is tight, money is pumped into the market by purchase of government securities.
While in the case of surplus, the excess money is sucked out by selling of government bonds.
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