RBI to sell 12000 crore rupees govt bonds through Open Market Operations

RBI to sell 12000 crore rupees government bonds through OMO to squeeze the liquidity in the market.

Created On: Nov 29, 2014 11:21 ISTModified On: Nov 29, 2014 11:23 IST

Reserve Bank of India (RBI) on 26 November 2014 decided to sell worth 2000 crore rupees government bonds through Open Market Operations (OMOs) to squeeze the liquidity in the market.

RBI will sell government securities maturing in 2017 (bearing interest rate of 8.07 per cent), 2020 (7.80 percent), 2022 (8.08 percent) and 2027 (8.26 percent).

Open Market Operations

• Open market operations (OMO) are a monetary policy tool used by RBI to increase or decrease money supply by buying and selling government bonds in the open market.

• When the RBI feels there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity. Similarly, when the liquidity conditions are tight, the RBI will buy securities from the market, thereby releasing liquidity into the market.

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