Mumbai (IANS) To maintain comfortable liquidity conditions in the Covid battered economy, the Reserve Bank of India (RBI) on Friday announced the sale and purchase of government securities worth Rs 20,000 crore under open market operations (OMOs).
According to RBI Governor Shaktikanta Das, the OMOs worth Rs 20,000 crore would be conducted on a date yet to be announced.
"Market participants should be assured that in keeping with the monetary policy stance announced today, the RBI will maintain comfortable liquidity conditions and will conduct market operations in the form of outright and special open market operations," he said.
"In response to feedback from market participants, the size of these auctions will be increased to Rs 20,000 crore. It is expected that the market participants will respond positively to this initiative."
Furthermore, he said that OMOs in State Development Loans (SDLs) would be conducted.
"In order to impart liquidity to SDLs and thereby facilitate efficient pricing, it has been decided to conduct open market operations (OMOs) in SDLs as a special case during the current financial year," he said.
"This would improve secondary market activity and rationalise spreads of SDLs over the Central government securities of comparable maturities. This measure, along with the extension of HTM (Held to Maturity Category) till March 2022, should ease concerns about illiquidity and absorptive capacity for the total government borrowing in the current year."