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24-Apr2019

RBI to infuse Rs 25,000 crore in May via purchase of g-secs

The Reserve Bank of India has decided to infuse more liquidity into market. It will buy government securities under Open market operations (OMOs) for an aggregate amount of Rs 25,000 crore in May 2019 through two auctions of Rs 12,500 crore each.

Based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, the central bank has decided to purchase government securities (g-secs). The first auction of Rs 12,500 crore will be conducted on May 2, 2019. The date of the other auction was not announced. It also added that the OMO amount of Rs 25,000 crore was indicative and RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions.

OMOs are conducted by the RBI by sale or purchase of g-secs to regulate money supply in the market. The sale or buying of g-secs infuses or reduces liquidity. OMOs like repo rate, cash reserve ratio and statutory liquidity ratio are monetary policy tools to balances inflation.


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