The Reserve Bank of India (RBI) would introduce Rs 8,000 crore into the market by purchasing government securities on November 22.
The resolution comes in the midst of anxiety of a liquidity crisis in the economy after the financial services company IL&FS reported defaults in September.
“Based on an assessment of current liquidity circumstances and also of the durable liquidity needs going forward, the Reserve Bank has decided to conduct the purchase of the following government securities under Open Market Operations for an aggregate amount of Rs 80 billion on November 22, 2018, through multi-security auction using the multiple price method,” the RBI said in a statement.
The eligible participants should submit their offers in electronic format on the Reserve Bank of India Core Banking Solution system on 22 November.
RBI had earlier stated that the system liquidity will move into deficit in the second half of 2018-19 and the evolving liquidity conditions would determine its choice of instruments for both transient and durable liquidity management. As part of the OMO operations, RBI will purchase government securities maturing in 2021 bearing an interest rate of 7.80%, 2024 (8.40%), 2026 (8.33%), 2028 (8.60%) and 2032 (8.28%).
