The Reserve Bank of India (RBI) on Thursday announced an additional purchase of government securities under open market operations (OMOs) in June for an aggregate amount of Rs 12,500 crore after assessing the current liquidity conditions and future requirements. The RBI had conducted OMOs worth Rs 15,000 crore on Thursday itself.
According to Care ratings, liquidity conditions improved in the week ended June 7, with the average net outstanding liquidity for the week moving into a surplus for the first time after a period of 34 weeks. The average net outstanding liquidity surplus amounted to `84,995 crore during the week as against a deficit of `12,916 crore in the previous week.
Experts at the ratings agency said, “The improvement in the banking system liquidity situation can be credited to the higher government spending, redemption of G-secs, higher foreign inflows and the likely (gradual) return of currency with public back into the banking system.”
Foreign portfolio investors (FPIs) have invested $1 billion in Indian debt markets so far in June.
The OMO will take place on June 20, taking the total infusion so far in June to `27,500 crore, as against OMO purchases worth Rs 25,000 crore in May.
The RBI uses open market operations for injecting liquidity into the system through purchase of government bonds (G-Sec).