Mumbai: The Reserve Bank on Thursday announced that it will purchase government securities worth Rs 12,000 crore through open market operations on Friday to ease the current liquidity crisis.
"Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, RBI has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on February 24, 2011, through a multi-security auction...," the apex bank said in a statement.
RBI will conduct the auction at its Mumbai office.
The auction will be in four price methods – government securities (G-Sec) maturing in 2017 with a coupon of 8.07 per cent, G-Secs maturing in 2021 with a coupon rate of 8.79 per cent, G-Secs maturing in 2027 with a 8.28 per cent coupon rate and G-Secs maturing in 2032 with also a 8.28 per cent coupon rate.
"There is an overall aggregate ceiling of Rs 12,000 crore for all the securities in the basket put together. There is no security-wise notified amount," RBI said.
RBI Deputy Governor Subir Gokarn had earlier said liquidity is likely to be under pressure for some more time amid factors like advance tax payment. He had said there is still scope for OMOs to lighten the pressure on liquidity.
RBI has said in the past that the liquidity deficit has exceeded its target of 1 per cent of net demand and time liabilities (NDTL).
The apex bank has purchased government securities worth over Rs 92,000 crore from the money markets in ten instalments in the past two months as part of efforts to infuse liquidity into the system.
OMOs are the "first preference" of the 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 stand at 29 per cent, 5 per cent over the prescribed SLR cap of 24 per cent.
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