RBI announces OMO purchase of govt securities worth Rs 10,000 crore

The Reserve Bank of India on Thursday announced an open market operations (OMO) purchase of government securities worth Rs 10,000 crore on september 24 to inject liquidity in the system.

"On a review of the current liquidity and financial conditions, the Reserve Bank has decided to conduct purchase of government securities under open market operations (OMOs) for an aggregate amount of Rs 10,000 crore on September 24, 2020," the central bank said in a press release.

The central bank resorts to sale of government securities when it feels that there is excess liquidity in the market. In case of liquidity crunch, it buys securities to maintain stability in the market. Based on a review of the current liquidity and financial conditions, the RBI conducts open market operations to ensure that all market segments remain liquid and stable, and function normally.

The OMO will be conducted through multi-security auction using the multiple price method, the RBI said.

"Eligible participants should submit their bids in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 10:00 am and 11:00 am on September 24," it said.

The result of the auction will be announced on the same day and successful participants will be allotted requisite amount of securities in their Subsidiary General Ledger (SGL) account by 12 noon on September 25, 2020.

The apex bank said that it will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly functioning of financial markets.

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