The RBI has been conducting OMO purchase auctions since late January 2025 to infuse liquidity into the banking system
| Photo Credit:
Dzmitry Skazau

Keeping up its liquidity injection efforts, the Reserve Bank of India on Monday announced an auction calendar for May, whereby it will conduct open market operations (OMOs) for purchase of Government Securities (G-Secs) aggregating ₹1.25 lakh crore in four tranches.

The RBI has been conducting OMO purchase auctions since late January 2025 to infuse liquidity into the banking system. Liquidity in the system turned into deficit in Q4FY25 mainly due to seasonal increase in currency in circulation and RBI’s forex operations.

However, system liquidity turned into surplus since late March with the surplus currently at about ₹1.02 lakh crore at the last count on April 25.

System liquidity turned into surplus since March 29, after a gap of over three months on account of RBI’s liquidity augmenting measures (through a combination of OMO purchases, longer-duration variable rate repo auctions and forex swaps) along with the usual drawdown of government cash balances in the month-end, according to RBI’s latest monthly bulletin.

As per the OMO auction calendar for May, the RBI will conduct auctions on May 6 (for ₹50,000 crore), May 9, May 15 and May 19 (for ₹25,000 crore each).

The central bank injected liquidity aggregating ₹3,24,541 crore through OMO G-Sec purchase auctions conducted between January 30 to April 17, 2025. It will be conducting an OMO auction tomorrow to inject liquidity amounting to ₹20,000 crore.

Avnish Jain, Head – Fixed Income, Canara Robeco Mutual Fund, observed that easy liquidity due to OMO purchase auctions, expected dividend announcement of about ₹3 lakh crore by RBI to the Government and the likelihood of two more rate cuts of 25 basis points each could soften yield of the benchmark 10-year G-Sec to 6.20-6.30 per cent from about 6.40 per cent now.

Published on April 28, 2025