The Reserve Bank of India (RBI) on December 11 injected Rs 50,000 crore liquidity through Open Market Operation (OMO) purchases of government securities, and received more than double the bids at auction.
The central bank received bids worth Rs 1,11,615 crore at auction for seven securities, but accepted only Rs 50,000 crore. These funds will be injected to the banking system as durable liquidity.
The central bank announced OMO purchase auctions of Government of India securities in the December monetary policy for an aggregate amount of Rs 1 lakh crore in two tranches of Rs 50,000 crore each to be held on December 11, 2025, and December 18, 2025.
The OMO purchase operation by the RBI often helps the banking system to get durable liquidity and reduces bond yields.
The central bank has so far conducted Rs 27,280 crore worth of OMO purchases in the secondary market. According to the RBI data, the central bank conducted Rs 14,810 crore OMO purchases between November 10 and November 13, and Rs 12,470 crore between November 4 and November 7.
On December 5, Moneycontrol reported that as the defence of the Indian rupee intensifies through sustained intervention by the Reserve Bank of India (RBI), liquidity conditions in the domestic banking system have come under strain. With dollar sales tightening rupee liquidity, the bond market is increasingly pricing in the possibility of an Open Market Operation (OMO) purchase of government securities in the December monetary policy review to ease system-level liquidity stress.
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