The Reserve Bank of India (RBI) received a strong response to its open market operation (OMO) purchase, attracting bids worth over Rs 67,540 crore, against the notified amount of Rs 50,000 crore. The purchase of government securities is aimed at infusing liquidity as the deficit in the system is hovering around Rs 2 lakh crore.
“The RBI’s stance on liquidity management seems to have shifted towards accommodative from neutral, as reflected in the large liquidity infusion using multiple tools. If this continues, the overall rates in the economy, including lending rates by banks, may start softening,” said Soumyajit Niyogi, director – core analytical group, India Ratings and Research.
According to recent RBI data, the liquidity deficit reached Rs 1.94 lakh crore on March 24. The previous OMO, conducted on March 18, had also received good response, with the apex bank receiving bids worth over Rs 1.01 lakh crore, against the notified amount of Rs 50,000 crore.
The RBI, on Monday, conducted forex swap auction where banks aggressively placed bids – the central bank received bids worth $22.28 billion, against the notified amount of $10 billion.
The daily banking system liquidity remained tight in February and moderated in the first week of March because of month-end government spending. The overall net daily banking system liquidity improved to an average of Rs 1 lakh crore in March (till 10th) from Rs 1.6 lakh crore in February, noted a report by India Ratings and Research.