Rs 1.25-trn liquidity drive in progress
Mumbai: Reserve Bank of India (RBI) has decided to inject more liquidity into the banking system through the purchase of Government bonds for an aggregate amount of Rs1.25 lakh crore in May. The move is also expected to prop up bond prices, which had declined due to a sell-off by foreign banks and primary dealers after the uncertainty triggered by the Pahalgam attack.
The RBI's open market operations (OMO) to purchase government bonds will be carried out in four tranches between May 6 and May 19. The decision was taken after a review of current and evolving liquidity conditions, according to an RBI statement.
The move comes close on the heels of the RBI's announcement on April 1 to buy government bonds worth Rs80,000 crore, which was followed by another Rs40,000 crore purchase announced on April 11.
RBI Governor Sanjay Malhotra has stated that the central bank will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions.
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