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RBI to conduct special OMO of Rs 10,000 crore on February 25

The central bank will purchase and sell government securities through multiple price auction method.

twitter-logoBusinessToday.In | February 15, 2021 | Updated 18:53 IST
RBI to conduct special OMO of Rs 10,000 crore on February 25
Earlier on February 10, the central bank had purchased Rs 20,000 crore of bonds through OMO.

To ensure liquidity in the system, the Reserve Bank of India (RBI) will conduct simultaneous purchase and sale of government securities under open market operations (OMO) aggregating Rs 10,000 crore each on February 25.

The central bank will purchase and sell government securities through multiple price auction method.

"On a review of current liquidity and financial conditions, the Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under open market operations for an aggregate amount of Rs 10,000 crore each on February 25, 2021," the RBI said in a release.

Also read: RBI forms expert committee for urban co-operative banks to strengthen sector

Earlier on February 10, the central bank had purchased Rs 20,000 crore of bonds through OMO.

RBI Governor Shaktikanta Das, in his address after the meeting of the Monetary Policy Committee on February 5, had said that the central bank will continue to maintain an "accommodative liquidity stance" to support growth in the economy battered by the COVID-19 pandemic.

The RBI's market operations amid the pandemic have dispelled illiquidity fears and bolstered financial market sentiment, he said. On government's market borrowing, Das said, the central bank will ensure "orderly" completion of Rs 12 lakh crore borrowing programme in a non-disruptive manner.

The government raises money from the market through bonds and treasury bills to fund its fiscal deficit. Finance Minister Nirmala Sitharaman, in her Budget speech, had pegged India's fiscal deficit at 6.8 per cent of GDP in financial year 2021-22, down from 9.5 per cent in 2020-21.

Also read: RBI to conduct OMOs for Rs 20,000 crore on February 10

Also read: Will retail investors take up RBI's offer to open gilt accounts?

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