RBI announces fresh purchase of Rs 30,000 crore govt securities to boost liquidity

The Reserve Bank of India (RBI) on Friday announced additional purchase of government securities worth Rs 30,000 crore through open market operations (OMO) to boost liquidity and enhance investor confidence in the financial markets that remain under stress over COVID-19 related disruptions.

The central bank issued a statement on March 20 saying that it will conduct purchase of government securities under OMOs for an aggregate amount of Rs 30,000 crores in two tranches of Rs 15,000 crore each in the month of March 2020.

"The auctions would be conducted on March 24, 2020 and March 30, 2020," the RBI notified.

The first OMO purchase auction will be conducted on March 24, 2020 for purchase of an aggregate amount of Rs 15,000 crore of the government securities through a multi-security auction using the multiple price method.

"There is no notified amount against any of these securities within the aggregate ceiling of Rs 15,000 crores set for the operation," it said.

As per the RBI, the result of the auction will be announced on the same day and payment to successful participants will be made during banking hours on March 26, 2020.

"Successful participants should ensure availability of requisite amount of securities in their SGL accounts by 12 noon on March 26, 2020," it added.

Earlier today, the RBI had conducted open market operations in the form of purchase of Rs 10,000 crores of the government securities through a multi-security auction using the multiple price method.

Commenting on the security auction, the apex bank said "the response to the open market purchase auction conducted on March 20, 2020 has been positive".

"Meanwhile, with the COVID-19 related dislocations, stress in certain financial market segments is still severe and financial conditions remain tight. The RBI's endevour is to ensure that all markets segments function normally with adequate liquidity and turnover," it said.

On Monday, the RBI had announced to conduct additional Long Term Repo Operations (LTROs) for amount up to Rs 1,00,000 crore at the policy repo rate on March 18, 2020. Based on further review of evolving liquidity conditions, additional tranches of the LTROs would be announced separately, it had said.

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