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The Reserve Bank has decided to conduct Open Market Operations (OMO) by purchasing four government securities for an aggregate amount of Rs 10,000 crore on January 22. The OMO is being conducted as, according to the RBI, the current assessment suggests that the strain on market liquidity is likely to endure in view of the fiscal targets set for the year as well as projections for aggregate credit growth, warranting the need to provide liquidity of a more permanent nature.
The RBI said liquidity conditions are undergoing some stress, primarily on account of the build-up of cash balances of the Government. The RBI said it will be conducting OMO by purchasing four G-Secs — that is, government security (GS) maturing in 2017 (July) and carrying coupon rate of 8.07 per cent; 7.28 per cent GS 2019; 7.16 per cent GS 2023; and 8.28 per cent GS 2027 — aggregating Rs 10,000 crore.
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