

RBI net buys over Rs 10,000 crore gilts in secondary market
government bonds in the secondary market in the week ending January 17 to ease the liquidity conditions. This is said to be the first such operation by the central bank in the last three years.
Data released by RBI shows purchases were made across three sessions. The central bank bought ₹2,570 crore worth of government bonds on January 15, ₹4,480 crore on January 16, and ₹3,125 crore on January 17, the weekly statistical supplement (WSS) shows.
Treasury heads view the move to inject durable liquidity as a positive action. «This move underscores the central bank's intent to bolster system liquidity, which is expected to positively impact both liquidity conditions and government bond yields,» said VRC Reddy, head of treasury at Karur Vysya Bank.
The banking system liquidity has been in deficit since mid-December and peaked at ₹3.16 lakh crore despite a 50-basis point cut in the cash reverse ratio that released ₹1.16 lakh crore into the system.
Subsequently, in mid-January, RBI announced it would hold a daily variable rate repo auction. The average shortfall in liquidity is estimated at nearly ₹2 lakh crore per day.
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