The Reserve Bank of India (RBI) announced that it would purchase government securities worth Rs10,000 crore through open market operations (OMO) on Friday to tide over the current liquidity crisis.
'Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, RBI has decided to conduct OMO by purchasing government securities for an aggregate amount of Rs10,000 crore on February 3, 2011, through a multi-security auction...,' the apex bank said in a statement.
The auction is to be conducted by the bank at its Mumbai office.
The auction will be in four price methods -- government securities (G-Sec) maturing in 2018 with a coupon of 8.24%, G-Secs maturing in 2022 with a coupon rate of 8.20%, G-Secs maturing in 2024 with a 9.15% coupon rate and G-Secs maturing in 2032 with an 8.28% coupon rate.
'There is an overall aggregate ceiling of Rs10,000 crore for all the securities in the basket put together. There is no security-wise notified amount,' the RBI said.
RBI Deputy Governor Subir Gokarn had earlier said liquidity is likely to be under pressure for some more time amid factors like advance tax payment.
The RBI has said in the past that the deficit has exceeded its target of 1% of net demand and time liabilities (NDTL).
The apex bank has purchased government securities worth over Rs73,000 crore from the money markets in eight installments in the past two months as part of efforts to infuse liquidity into the system.
OMOs are the 'first preference' of the RBI while injecting liquidity and there is an opportunity to raise up to Rs2.74 lakh crore through the window as banks' government bond holdings stand at 29%, 5% over the prescribed SLR cap of 24%.
....more info
'Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, RBI has decided to conduct OMO by purchasing government securities for an aggregate amount of Rs10,000 crore on February 3, 2011, through a multi-security auction...,' the apex bank said in a statement.
The auction is to be conducted by the bank at its Mumbai office.
The auction will be in four price methods -- government securities (G-Sec) maturing in 2018 with a coupon of 8.24%, G-Secs maturing in 2022 with a coupon rate of 8.20%, G-Secs maturing in 2024 with a 9.15% coupon rate and G-Secs maturing in 2032 with an 8.28% coupon rate.
'There is an overall aggregate ceiling of Rs10,000 crore for all the securities in the basket put together. There is no security-wise notified amount,' the RBI said.
RBI Deputy Governor Subir Gokarn had earlier said liquidity is likely to be under pressure for some more time amid factors like advance tax payment.
The RBI has said in the past that the deficit has exceeded its target of 1% of net demand and time liabilities (NDTL).
The apex bank has purchased government securities worth over Rs73,000 crore from the money markets in eight installments in the past two months as part of efforts to infuse liquidity into the system.
OMOs are the 'first preference' of the RBI while injecting liquidity and there is an opportunity to raise up to Rs2.74 lakh crore through the window as banks' government bond holdings stand at 29%, 5% over the prescribed SLR cap of 24%.
....more info