Reserve Bank To Inject Rs 12,000 Crore By Buying Government Bonds On October 11
On Tuesday, the Reserve Bank of India announced that it will inject Rs 12,000 crore liquidity into the system by buying government bonds on October 11 to meet the festival season demand for funds.
RBI stated that the government will purchase bonds with maturity ranging between 2020 to 2030.
The auction to purchase government bonds is a part of the Open Market Operations (OMO) to manage liquidity in the system which seems to be facing liquidity tightness.
The central Bank stated that depending upon the assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the Reserve Bank has decided to conduct purchase of the following government securities under Open Market Operations for an aggregate amount of Rs 120 billion on October 11, 2018 through multi-security auction using the multiple price method.
Ultimate outcome of the auction will be announced on the same day and payment to successful participants will be made during banking hours on October 12, it said.
Being a part of the Open Market Operations, the RBI will purchase government securities maturing in 2020 bearing interest rate of 8.27 per cent, 2022 (8.15 per cent), 2024 (7.35 per cent), 2026 (8.15 per cent) and 2030 (7.61 per cent).