RBI schedules Rs 1 lakh-crore OMO purchases
Change
The Reserve Bank of India scheduled open market operation purchases totaling Rs 1 lakh crore in two Rs 50,000-crore tranches on March 9 and March 13.
Why it matters
Two open market operation auctions of Rs 50,000 crore each are scheduled for March 9 and March 13. Banking system liquidity averaged a daily surplus of Rs 2.63 lakh crore in March so far and Rs 2.53 lakh crore in February. Advance-tax outflows in mid‑March are approximately Rs 2 lakh crore. The RBI purchased Rs 12,715 crore of bonds on-screen in February; data confirming additional on-screen purchases in the first week of March will be released next week.
Implications
- • Advance-tax outflows of about Rs 2 lakh crore create a mid‑March liquidity drain that the OMOs target.
- • OMO purchases require sellers to part with government securities, reducing banks' holdings of high-quality liquid assets.
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