Why is it in the news?
The Reserve Bank of India announced Open Market Operation purchases worth ₹1 lakh crore.
The move aims to inject liquidity into the banking system ahead of advance tax outflows.
Category: Economy
Important Points:
● RBI announced OMO purchases of ₹1 lakh crore in two tranches.
● Each tranche involves purchase of ₹50,000 crore worth of government securities.
● Advance tax payments in mid-March usually withdraw around ₹2 lakh crore from the banking system.
● Open Market Operations involve buying or selling government securities.
● Purchase of securities injects liquidity into the banking system.
● Sale of securities absorbs liquidity from the system.
● RBI conducts OMOs through auctions or direct market operations via the E-Kuber platform.
● Participants include primary dealers, commercial banks and other eligible financial institutions.
● OMOs complement other quantitative tools like CRR and SLR for liquidity management.