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RBI to buy Rs 12,000 cr worth govt securities

Mumbai: File PhotoTo tide over the current liquidity crisis, the Reserve Bank today announced it will purchase government securities worth Rs 12,000 crore on Thursday through open market operations.

“Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, RBI has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on December 29, 2011, through multi-security auction…,” the apex bank said in a statement.

The auction is to be conducted by the bank at its Mumbai office. The auction will be in four price methods–government security (G-Sec) maturing 2017 with a coupon of 7.49 per cent, G-Sec maturing 2018 with a coupon of 7.83 per cent, G-Sec maturing 2021 with 7.80 per cent and G-Sec 2022 with 8.08 per cent.

“There is an overall aggregate ceiling of Rs 12,000 crore for all the securities in the basket put together. There is no security-wise notified amount,” RBI said. RBI Deputy Governor Subir Gokarn had last month said that liquidity is likely to be under pressure for some more time amid factors like advance tax payment.

RBI had said in the past that deficit has exceeded its targeted one per cent of net demand and time liabilities (NDTL). The apex bank has also purchased government securities of over Rs 24,311 crore from the money markets in three instalments in the past month as part of its efforts to infuse liquidity into the system.

OMOs are the “first preference” of RBI while injecting liquidity and there is an opportunity to raise up to Rs 2.74 lakh crore through the window as banks’ government bond holdings are at 29 per cent, 5 per cent over the prescribed SLR cap of 24 percent, he said.

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