Reserve Bank of India (RBI) has announced Open Market Operation:
The Reserve Bank of India (RBI) has announced Open Market Operation (OMO) purchases worth Rs 1 lakh crore in two tranches to infuse liquidity into the banking system.The OMO purchases of Rs 50,000 crore each are scheduled just ahead of advance tax outflows, which typically see approximately Rs 2 lakh crore exiting the banking system in mid-March. This strategic timing aims to neutralize the liquidity crunch. OMO is a quantitative instruments of monetary policy that involves the buying and selling of government securities (G-Secs), including dated securities and treasury bills.Purchase of securities injects liquidity into the banking system (expansionary effect), while sale of securities absorbs liquidity (contractionary effect), thereby influencing the money supply.RBI conducts OMOs through auctions or direct market operations involving primary dealers, commercial banks, and other eligible participants via the electronic platform, the E-Kuber system.
