With surplus liquidity, n’joy festive season!

RBI is pumping Rs 360 billion in October 

The Reserve Bank of India (RBI) had telegraphed in its previous post-monetary policy press conferences that the system liquidity will move into deficit in the second half of the fiscal year and that the evolving liquidity conditions shall determine its choice of instruments for both transient and durable liquidity management.

Based on an assessment of the durable liquidity needs going forward and the seasonal growth in currency in circulation observed in build-up to the festive season, RBI has decided to conduct purchase of Government securities under Open Market Operations (OMOs) for an aggregate amount of Rs 360 billion in the month of October 2018.The auctions would be conducted during the 2nd, 3rd and 4th week of October.

The auction dates and the Government securities to be purchased in respective auctions would be communicated in due course. The OMO amount stated above is indicative and RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions.

Based on its assessment of the financial markets, the Reserve Bank of India has taken several proactive steps in the last few days. The Reserve Bank stands ready to meet the durable liquidity requirements of the system through various available instruments depending on its dynamic assessment of the evolving liquidity and market conditions just ahead of festive season!

As a result of these steps, the system liquidity is in ample surplus.