Reserve Bank of India on Friday decided to infuse additional liquidity with a second tranche of bond purchase worth ₹30,000 crores amid the Covid-19 pandemic. The two, five, six and nine year security would be brought through open market operations in two tranches of ₹15,000 crore each, the central bank said. The auction will be conducted on 24 March and 30 March.
On Tuesday RBI had done the first tranche of OMO following the tightness in the commercial paper market.
“The response to the open market purchase auction conducted on March 20, 2020 has been positive. Meanwhile, with the COVID-19 related dislocations, stress in certain financial market segments is still severe and financial conditions remain tight,” it said.
RBI has been taking steps to improve liquidity and monetary transmission in the market. On 16 March, it announced up to ₹1 trillion in long-term repo operations in multiple tranches, along with a $2 billion dollar swap. The central bank, unlike its global peers, did not lower interest rates as was expected by markets earlier this week, but announced measures to boost liquidity.
RBI governor Shaktikanta Das said the central bank was ready to act and the rate cut decision will be taken by the monetary policy committee (MPC), slated to meet next month.