The Reserve Bank of India (RBI) on March 18 received bids exceeding twice the notified amount in its open market operation (OMO) purchase from banks. The central bank got bids worth more than Rs 1.01 lakh crore, against the notified amount of Rs 50,000 crore.
Why is RBI Buying Government Securities?
- Infuses Liquidity: Ensures adequate cash flow in the banking system.
- Prepares for Tax Outflows: GST & advance tax payments drain liquidity.
- Eases Financial Stress: Supports credit availability & economic activity.
- Maintains Interest Rate Stability: Helps control market volatility.
Other Liquidity Measures by RBI
- Lowering the Cash Reserve Ratio (CRR)
- Daily Variable Rate Repo (VRR) Auctions
- Long-Term Repo Operations (LTROs)
- Forex Swaps
- OMO Purchases
(Source: Financial Express)
