RBI Accepts Rs 25,000 Crore in Second OMO Sale Tranche

The Reserve Bank of India accepted bids worth Rs 25,000 crore in the second tranche of its open market operation sale of government securities to absorb surplus liquidity from the banking system. This follows a broader central bank initiative announced to execute OMO sales worth a total of Rs 1 lakh crore across three distinct tranches.

Breaking Down the Accepted Security Bids

During this auction round, the central bank distributed its accepted bids across several specific government security maturities. The allocation figures detailed by the institution break down as follows:

• Rs 11,512 crore of the 6.10 per cent GS 2031
• Rs 8,758 crore of the 7.95 per cent GS 2032
• Rs 2,300 crore of the 6.75 per cent GS 2029
• Rs 2,250 crore of the 7.17 per cent GS 2030
• Rs 180 crore of the 7.17 per cent GS 2028

However, the central bank did not accept any bids for the 8.28 per cent GS 2027. This targeted absorption mechanism requires banks and other investors to pay the RBI for government securities, effectively draining rupee liquidity from the system.

The Liquidity Surplus Driving the Action

Data from the Reserve Bank of India estimated the banking system liquidity surplus at around Rs 6.05 lakh crore as of September 20. This surplus built up due to heavy mobilisation of FCNR (B) deposits by banks, which brought foreign currency into the system alongside subsequent swaps with the central bank providing rupee liquidity. Month-end government expenditure, including salary and pension payments, also contributed to the high liquidity levels. The first tranche of Rs 50,000 crore took place on September 17, while the remaining final tranche of Rs 25,000 crore is scheduled for September 28.