RBI to Inject ₹1 Lakh Crore via OMOs, Plans $10 Billion Swap
The Reserve Bank of India (RBI) has announced a series of liquidity measures to stabilize the financial system, including Open Market Operations (OMOs) and a foreign exchange (forex) swap auction. These steps aim to address liquidity concerns and maintain a smooth flow of credit in the economy.
RBI to Infuse ₹1 Lakh Crore via OMOs
To ease liquidity conditions, the RBI will conduct two OMOs, each worth ₹50,000 crore, on March 12 and March 18. Through these operations, the central bank will purchase government securities from the market, injecting ₹1 lakh crore into the banking system. This move is expected to enhance lending capacity, ensuring financial institutions have sufficient liquidity.
$10 Billion Forex Swap to Manage Liquidity
In addition to OMOs, the RBI has scheduled a dollar-rupee buy/sell forex swap auction worth $10 billion on March 24. This measure involves the temporary withdrawal of rupees from the market in exchange for US dollars, with a commitment to reverse the swap later. Such transactions are crucial in managing foreign exchange liquidity and stabilizing currency markets.
Addressing Liquidity Deficit
The banking system has been facing a liquidity deficit, with recent estimates showing a shortfall of ₹20,420 crore, the lowest since mid-December. Factors such as tax outflows, foreign exchange interventions, and lower government spending have contributed to the tight liquidity situation. The RBI’s latest steps are expected to provide much-needed relief to the financial sector and support credit flow.
Ensuring Stability in Financial Markets
The RBI has reaffirmed its commitment to monitoring liquidity conditions and taking necessary actions to maintain financial stability. By implementing targeted liquidity measures, the central bank aims to support economic growth, prevent disruptions in credit availability, and maintain market confidence.
With these strategic interventions, the RBI continues to play a key role in ensuring a stable and well-functioning financial system, addressing short-term liquidity needs while keeping long-term economic stability in focus.
