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Reserve Bank of India: RBI has announced an open market operation. The liquidity deficit in the banking system has reached Rs 3.13 lakh crore, due to which RBI has announced this.

Reserve Bank of India: The Reserve Bank of India (RBI) has made several important announcements to increase liquidity (cash) in the banking system, including a USD/INR swap auction of $ 5 billion. Through this, Rs 43,000 crore will be put in the banking system. RBI has also announced the purchase of government securities worth Rs 60,000 crore. This will be done in three installments on January 30, February 13, and February 20. There will be an OMO of Rs 20,000 crore in each phase.

Variable Rate Repo (VRR) auction will also be conducted.

RBI has also mentioned the Variable Rate Repo (VRR) auction of Rs 50,000 crore on February 7. Its tenure will be 56 days. Actually, at this time the liquidity deficit in the banking system has reached Rs 3.13 lakh crore. RBI said that a USD/INR swap auction of $ 5 billion is to be organized on January 31. Its tenure will be for six months.

Buy/Sell Swap Matures in Six Months

VRC Reddy, Treasury Head of Karur Vysya Bank said, "If the buy/sell swap is fully subscribed, it is likely to bring Rs 43,000 crore into the system. This fund will be added to the system on February 4." In the buy/sell swap, RBI will buy $ 5 billion from banks and give them an equal amount of rupees. This swap will mature in six months. This means that RBI will sell $5 billion to banks, which will bring the same amount of rupees out of the system.

What is OMO?

The Reserve Bank said that the OMO purchase auction of government securities worth a total of Rs 60,000 crore will be conducted in three phases of Rs 20,000 crore each on January 30, 2025, February 13, 2025, and February 20, 2025. Let us tell you that Open Market Operation (OMO) is a method through which the Reserve Bank buys and sells government securities and treasury bills. RBI does this to increase the supply of money in the economy. This is a method through which liquidity is controlled in the economy throughout the year.

Disclaimer: This content has been sourced and edited from abplive. While we have made modifications for clarity and presentation.