In a bid to tide over the tight liquidity situation,the Reserve Bank of India (RBI) on Monday announced that it will purchase government securities worth Rs 10,000 crore on Thursday through Open Market Operations (OMO). The RBI has already purchased government securities of over Rs 14,000 crore (against a target of Rs 20,000 crore) from the money markets in two instalments in the past fortnight as part of its efforts to infuse liquidity into the system. Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions,the RBI has decided to conduct OMO by purchasing government securities for an aggregate amount of Rs 10,000 crore on December 8,2011,through multi-security auction, the apex bank said in a statement. The auction will be in four price methods including government security (G-Sec) maturing 2017 with a coupon of 8.07 per cent,G-Sec maturing 2018 with a coupon of 7.83 per cent,G-Sec maturing 2022 with 8.13 per cent and G-Sec 2017 with 8.28 per cent. There is an overall aggregate ceiling of Rs 10,000 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 last week said that liquidity is likely to be under pressure for some more time amid factors like advance tax payment. Besides,the RBI intervention to salvage the rupee by pumping dollars and mopping up the rupee also put pressure on the liquidity. Overnight drawings by banks from RBIs liquidity adjustment facility have exceeded Rs 1,20,000 crore and the RBI had said in the past that deficit has exceeded its targeted 1 per cent of net demand and time liabilities (NDTL). OMOs are the first preference of RBI while injecting liquidity and there is an opportunity to raise up to Rs 2.74 lakh crore through the window as banks government bond holdings are at 29 percent,5 percent over the prescribed SLR cap of 24 percent,he said.
