Mumbai: The Reserve Bank of India (RBI) on Monday accepted bids worth Rs 25,000 crore in the second tranche of its ongoing open market operation (OMO) sales programme, as the central bank continued efforts to absorb surplus liquidity from the banking system.
The auction witnessed robust investor participation, with total bids amounting to Rs 84,982 crore, more than three times the notified amount. The strong response highlights sustained demand for government securities despite the RBI’s liquidity-tightening measures.
According to the auction results, the RBI accepted bids worth Rs 11,512 crore for the 6.10 per cent Government Security (GS) 2031 and Rs 8,758 crore for the 7.95 per cent GS 2032.
The central bank also accepted Rs 2,300 crore of the 6.75 per cent GS 2029, Rs 2,250 crore of the 7.17 per cent GS 2030 and Rs 180 crore of the 7.17 per cent GS 2028.
However, the RBI did not accept any bids for the 8.28 per cent GS 2027, according to the auction outcome.
The latest OMO sale comes at a time when liquidity conditions in the banking system remain significantly comfortable. RBI data showed surplus liquidity stood at around Rs 6.05 lakh crore as of September 20.
An OMO sale is a tool used by the central bank to withdraw excess liquidity from the financial system. By selling government securities to banks and market participants, the RBI absorbs surplus funds, helping maintain better control over short-term interest rates and overall monetary conditions.
The current liquidity absorption exercise is part of the RBI’s broader plan to conduct OMO sales worth Rs 1 lakh crore in three phases. The first tranche of Rs 50,000 crore was conducted on September 17, followed by the Rs 25,000-crore auction on September 21. The final tranche of Rs 25,000 crore is scheduled for September 28.
Market participants said the RBI’s move reflects its intent to gradually normalize liquidity conditions after a sustained build-up of surplus cash in the banking system.
(IANS)
