MUMBAI: RBI has announced a fresh round of bond purchases to support liquidity in the banking system. In May, it will buy Rs 1.25 lakh crore of govt securities through open market operations (OMOs).The programme, to be conducted in four tranches, begins with a Rs 50,000-crore auction on May 6, followed by three smaller auctions of Rs 25,000 crore each later in the month.
The move extends liquidity-easing efforts launched in April, when RBI conducted a Rs 40,000-crore OMO and a Rs 1.5-lakh-crore variable rate repo operation, alongside two smaller OMOs. The central bank said the decision reflected its assessment of “current and evolving liquidity conditions”. While RBI’s language was cautious, the scale and sequencing of its interventions suggest an intent to maintain banking system liquidity at a comfortable level, possibly near the 1% of banks’ net demand and time liabilities as stated by governor Sanjay Malhotra in his post-policy conference this month.
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