RBI to Inject Rs 1.25 Trillion Liquidity through Bond Purchases
ECONOMY & POLICY

RBI to Inject Rs 1.25 Trillion Liquidity through Bond Purchases

The Reserve Bank of India (RBI) announced its plan to purchase government bonds worth Rs 1.25 trillion through open market operations (OMOs) in four separate tranches during May, as part of its continued efforts to inject liquidity into the banking system.

According to the schedule, the first tranche amounting to Rs 500 billion is set for May 6, while the remaining three tranches of Rs 250 billion each will take place on May 9, 15, and 19. This move follows the RBI’s liquidity support measures in April, during which it infused Rs 1.2 trillion through debt purchases and foreign exchange swaps. Additionally, the central bank is set to purchase bonds worth Rs 200 billion on Tuesday, marking the final tranche for April.

Earlier in the month, the RBI had also cut the repo rate for the second consecutive time and shifted its policy stance to "accommodative" to further support the economy.

In a press conference held after the monetary policy announcement on April 9, Governor Sanjay Malhotra indicated that the RBI intended to maintain an adequate liquidity surplus in the banking system to facilitate effective transmission of policy rates. He noted that the desired surplus level was around 1 per cent of total deposits, which translates to approximately Rs 2.20 trillion to Rs 2.50 trillion.

As per the RBI’s data, the daily average surplus in the banking system for the week ending April 25 stood at Rs 809 billion, a decline from Rs 1.78 trillion recorded the previous week.

News source: Business Standard

The Reserve Bank of India (RBI) announced its plan to purchase government bonds worth Rs 1.25 trillion through open market operations (OMOs) in four separate tranches during May, as part of its continued efforts to inject liquidity into the banking system. According to the schedule, the first tranche amounting to Rs 500 billion is set for May 6, while the remaining three tranches of Rs 250 billion each will take place on May 9, 15, and 19. This move follows the RBI’s liquidity support measures in April, during which it infused Rs 1.2 trillion through debt purchases and foreign exchange swaps. Additionally, the central bank is set to purchase bonds worth Rs 200 billion on Tuesday, marking the final tranche for April. Earlier in the month, the RBI had also cut the repo rate for the second consecutive time and shifted its policy stance to accommodative to further support the economy. In a press conference held after the monetary policy announcement on April 9, Governor Sanjay Malhotra indicated that the RBI intended to maintain an adequate liquidity surplus in the banking system to facilitate effective transmission of policy rates. He noted that the desired surplus level was around 1 per cent of total deposits, which translates to approximately Rs 2.20 trillion to Rs 2.50 trillion. As per the RBI’s data, the daily average surplus in the banking system for the week ending April 25 stood at Rs 809 billion, a decline from Rs 1.78 trillion recorded the previous week. News source: Business Standard

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