The Reserve Bank of India (RBI) announced on March 5 that it would provide liquidity through purchasing operations on the open market (OMO) and auction for purchase / SUP / INR purchase exchanges.
On Wednesday, the central bank announced that it would make two purchase bids on the free market (OMO) of the auctions of the government of India, totaling RS 1 Lakh crosses. The auctions will take place in two parts: Rs 50,000 crore on March 12, 2025 and another crore of 50,000 rupees on March 18, 2025.
In addition, the RBI will hold a purchase / INR purchase sale / sale auction against 10 billion rupees with a 36 -month tenor on March 24, 2025.
The Indian banking system is currently faced with its most severe liquidity crisis in more than ten years, the liquidity of the system going from a surplus of RS 1.35 Lakh crosses in November to a deficit of Rs 0.65 Lakh crores in December. This deficit continued to grow, reaching RS 2.07 Lakh crore in January and Rs 1.59 Lakh crore in February.
“On an examination of current and scalable liquidity conditions, the reserve bank decided to carry out the following operations to inject liquidity into the banking system:
A. OMO Auction for the securities of the Indian government for a total amount of 1.00,000 roots in two slices of 50,000 roasters each in hand
March 12, 2025 (Wednesday) and March 18, 2025 (Tuesday).
Born USD / INR Buy / Sell Exchange Auctions of 10 billion USD for a tenor of thirty-six months to be held on March 24, 2025 (Monday), “noted the central bank.
The Central Bank has reaffirmed its commitment to closely monitor the liquidity and market conditions and take all the measures necessary to maintain the stability and the ordered management of liquidity.
The banking system has been presenting liquidity challenges since November 2024, allocated to factors such as tax outputs, significant foreign portfolio investors in Indian shares, RBI intervention on Forex markets and public spending below them.
To solve this problem, the RBI allowed approximately RS 3 Lakh of sustainable liquidity in the system through VRR auctions, exchanges and market operations open since the end of 2024.
