RBI Announces Rs 80000 Crore OMO Purchase to Ease Liquidity Crunch

The Reserve Bank of India RBI has unveiled plans to conduct fresh open market operations OMO to purchase government securities worth Rs 80000 crore The purchase will take place in four phases of Rs 20000 crore each on April 3 April 8 April 22 and April 29 2025

This initiative is part of the central banks ongoing strategy to regulate liquidity in the financial system The RBI emphasized that it will continue monitoring market conditions and take necessary steps to maintain liquidity stability

In March the RBI infused 1 lakh crore into the system through two OMO tranches of Rs 50000 crore each Despite these measures the Indian banking system is experiencing its most severe liquidity crisis in over a decade Liquidity which was in surplus at 1.35 lakh crore in November plunged into a deficit of 0.65 lakh crore in December deepening further to 2.07 lakh crore in January and 1.59 lakh crore in February

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This liquidity support arrives at a critical juncture as Indias economic recovery faces challenges such as inflationary pressures declining industrial output and global economic uncertainties Additionally geopolitical factors including the Russia Ukraine conflict have heightened market volatility impacting financial stability