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RBI to inject Rs 12,500 crore into financial system through OMOs

With an aim to increase liquidity into the market, the Reserve Bank of India (RBI) has stated that it would infuse Rs 12,500 crore into the financial system on March 07, 2019. The purchase will be made through open market operations (OMOs). It also said there is no security-wise notified amount.

The central bank said it has decided to purchase certain government securities under OMO for an aggregate amount of Rs 12,500 crore on March 07 through multi-security auction, using the multiple price method. It added that the decision is based on an assessment of liquidity conditions and also of durable liquidity needs.

The RBI further said the eligible participants should submit their offers in electronic format on RBI Core Banking Solution (E-Kuber) system before noon on March 07. The result of the auction will be announced on the same day and payment to successful participants will be made during banking hours on the following day.

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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