BackRBI announces bond buyback to infuse liquidity
RBI will buyback Rs10,000 cr worth of govt bonds through a open market operation in an auction on Wed
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Mumbai: The Reserve Bank of India (RBI) will buy back Rs10,000 crore worth of government bonds through a so-called open market operation (OMOs) in an auction on Wednesday.
The repurchase of the bonds, maturing in the next three to 13 years, will “provide liquidity of a more permanent nature," it said in a press release on its website.
“Liquidity conditions are undergoing some stress in the recent period, primarily on account of the build-up of cash balances of the Government of India...the current assessment suggests that the strain on market liquidity is likely to remain enduring in view of the fiscal targets set for the year as well as projections for aggregate credit growth, warranting the need to provide liquidity of a more permanent nature," RBI said on its website.
This is the first time the central bank is infusing liquidity through a buyback of bonds since November 2013 when it had repurchased Rs6,156 crore worth of bonds.
RBI is also conducting 7 day, 14 day and 28 day repo auctions to help banks tide over the tight liquidity, besides conducting a daily overnight repo auction.
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