RBI accepts Rs 25,000 crore bids in second tranche of OMO sale
In the second tranche of its open market operation (OMO) sale of government securities, the Reserve Bank of India (RBI) has accepted bids worth Rs 25,000 crore, as it stepped up efforts to absorb surplus liquidity from the banking system. The RBI accepted Rs 11,512 crore of the 6.10 per cent GS 2031, Rs 8,758 crore of the 7.95 per cent GS 2032, Rs 2,300 crore of the 6.75 per cent GS 2029, Rs 2,250 crore of the 7.17 per cent GS 2030, and Rs 180 crore of the 7.17 per cent GS 2028.
However, the RBI did not accept any bids for the 8.28 per cent GS 2027. The OMO sale comes amid a large liquidity surplus in the banking system. According to the RBI data, liquidity surplus was estimated around Rs 6.05 lakh crore as of September 20. Under an OMO sale, banks and other investors pay the RBI for the government securities, thereby draining rupee liquidity from the banking system. The RBI had announced OMO sales worth a total of Rs 1 lakh crore in three tranches - Rs 50,000 crore on September 17, followed by Rs 25,000 crore on September 21. The remaining last tranches of Rs 25,000 crore is scheduled for September 28.
The banking system was flushed with liquidity due to heavy mobilisation of FCNR (B) deposits by banks, as the mobilisation brought foreign currency into the system, while subsequent swaps with the RBI provided rupee liquidity to banks. Besides FCNR(B) inflows, month-end government expenditure, including payments toward salaries and pensions, also added to liquidity in the banking system.
