RBI accepts Rs 25,000 crore in 2nd OMO sale amid surplus liquidity
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The Reserve Bank of India (RBI) on Monday accepted applications worth Rs 25,000 crore in the second tranche of its ongoing open market operation (OMO) sale programme, as it continued to withdraw excess liquidity from the banking system.
The auction saw robust participation from investors, with total bids reaching Rs 84,982 crore, more than three times the notified amount. The strong response pointed to continued interest in government securities even as the RBI works to tighten liquidity.
As per the auction results, the RBI accepted bids worth Rs 11,512 crore for the 6.10 per cent Government Security (GS) 2031 and Rs 8,758 crore for the 7.95 per cent GS 2032.
The central bank also took up 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. No bids were accepted for the 8.28 per cent GS 2027.
The latest OMO sale takes place while liquidity in the banking system remains comfortable. RBI data indicated that surplus liquidity was about Rs 6.05 lakh crore as of September 20.
OMO sales are used by the central bank to sell government securities to banks and other investors, helping it absorb excess money from the financial system. This tool assists the RBI in managing short-term interest rates and maintaining desired liquidity conditions.
The ongoing liquidity withdrawal is part of the RBI’s wider plan to carry out OMO sales worth Rs 1 lakh crore in three phases. The first tranche of Rs 50,000 crore was completed on September 17, followed by the second tranche of Rs 25,000 crore on September 21.
The final tranche, valued at Rs 25,000 crore, is set to take place on September 28.
Market participants said the RBI’s move shows its intent to gradually bring liquidity back to a normal level after a steady accumulation of surplus cash in the banking system.
