RBI's OMO Purchases | 09 Mar 2026

Source: ET 

The Reserve Bank of India (RBI) has announced Open Market Operation (OMO) purchases worth Rs 1 lakh crore in two tranches to infuse liquidity into the banking system. 

• The OMO purchases of Rs 50,000 crore each are scheduled just ahead of advance tax outflows, which typically see approximately Rs 2 lakh crore exiting the banking system in mid-March. This strategic timing aims to neutralize the liquidity crunch. 

Open Market Operation (OMO) 

• About: OMO is a quantitative instruments of monetary policy that involves the buying and selling of government securities (G-Secs), including dated securities and treasury bills.  
  • Purchase of securities injects liquidity into the banking system (expansionary effect), while sale of securities absorbs liquidity (contractionary effect), thereby influencing the money supply. 
• Execution in India: RBI conducts OMOs through auctions or direct market operations involving primary dealers, commercial banks, and other eligible participants via the electronic platform, the E-Kuber system. 
• Objectives: The primary objectives are to adjust liquidity for durable banking system conditions and stabilize short-term rates to support monetary policy transmission. 
  • Additionally, operations aim to manage inflation by absorbing excess liquidity or support growth by infusing liquidity during deficits. 
• Types of OMOs: 
  • Outright OMOs: It is a permanent purchase or sale of securities leading to lasting changes in liquidity (e.g., the recent Rs 1 lakh crore purchase announcement). 
  • Temporary Operations: Short-term liquidity adjustments conducted through the Liquidity Adjustment Facility (LAF), including repo and reverse repo operations. 
• Significance: They complement other quantitative instruments like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), allowing the RBI to fine-tune liquidity in response to seasonal factors (like advance tax outflows), external shocks, or capital inflows without directly altering policy rates.