RBI to purchase Rs 1.25 lakh-crore bonds in May—Catch key takeaways

The Reserve Bank of India (RBI) on Monday announced bond purchases amounting to Rs 1.25 lakh crore in May. Using the open market operation (OMO) route, the central bank will undertake bond purchase auctions of government securities in four tranches, starting with Rs 50,000 crore worth bonds on May 6, according to an official release. 

Here are details of the four tranches, as communicated by the RBI: 

The RBI will issue detailed instructions about each tranch separately. 

The central bank also reiterated that it will continue to monitor evolving liquidity and market conditions and take necessary steps to “ensure orderly liquidity conditions” in the system going forward.

This month, the central bank undertook similar bond buys in a similar drive, purchasing government securities amounting to Rs 20,000 crore. 

The RBI utilises the open market route to adjust liquidity conditions in the domestic banking system from time to time. 

The Reserve Bank of India accepts eligible participants’ bids in electronic format on its Core Banking Solution system, called E-Kuber. It only accepts physical bids in the event of system failure. 

The outcome of the auction is announced on the same day.