Why RBI has injected ₹50,000cr in India's banking system
What's the story
The Reserve Bank of India (RBI) has injected ₹50,000 crore into the banking system. The central bank did this through Open Market Operation (OMO) purchases of government securities. The move is aimed at ensuring liquidity in the banking system amid heavy outflows due to advance tax and Goods and Services Tax (GST) payments later this month.
Purchase breakdown
Breakdown of RBI's recent OMO purchases
The RBI's recent OMO purchases include a range of government securities. These are the 6.33% GS (Government Security) 2035 bonds worth ₹13,507 crore, the 6.01% GS 2030 worth ₹13,494 crore, and the 6.10% GS 2031 worth ₹8,157 crore. Other purchases include the 7.30% GS 2053 worth ₹6,955 crore and the 7.18% GS 2033 worth ₹4,479 crore among others, totaling to nearly ₹50,000 crore in liquidity infusion through these transactions alone.
Liquidity status
Banking system's liquidity surplus and expected outflows
Currently, the liquidity in the banking system is estimated to be in surplus of around ₹2.41 lakh crore. This OMO purchase auction comes as a precautionary measure from RBI to tackle any potential liquidity crunch due to heavy outflows from advance tax and GST payments later this month. Despite these expected outflows, the banking system still maintains a significant liquidity surplus of ₹3.02 lakh crore at present time.
Year-to-date infusion
Total liquidity infused by RBI through OMO purchases this year
Since the beginning of this calendar year, the RBI has infused a total of ₹2.50 lakh crore through OMO purchases of government securities. This data highlights the central bank's ongoing efforts to maintain liquidity in the banking system and manage any potential financial challenges that may arise from large-scale outflows or other economic factors.