New Delhi: Ahead of the upcoming festive season, the Reserve Bank of India (RBI) has decided to infuse upto Rs. 36, 000 crore through open market purchase of bonds in October to boost liquidity due to increase in loan demand.
RBI has decided to conduct purchase of Government securities under Open Market Operations (OMOs) for an aggregate amount of 1,360 billion in the month of October 2018. This will be based on an analysis of the durable liquidity needs and the seasonal growth in currency in circulation, in view of the festive season.
The apex monetary body also informed that auctions would be conducted during the second, third and fourth week of October. The OMO amount stated above is indicative and RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions.
Market analysts have opined that infusion of more capital is required to address the cash deficit. While the recent squeeze in money market liquidity has been in focus, overall liquidity was due to remain tight in FY 2019, due to the depletion in FX reserves.
Last week, RBI had reassured the financial markets that it stands ready to meet the liquidity requirements of the system.
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Ms Kalinga