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RBI to Infuse $13.2 Billion Via Repos, Advances Bond Purchase

Image for Representation.

Image for Representation.

The RBI said on a review of the current liquidity and financial conditions, they have decided to advance the second trance of the OMO purchase.

New Delhi: The Reserve Bank of India stepped in to calm markets once again by bringing forward its open market purchase of bonds worth up to 150 billion rupees while also announcing a fresh round of fund infusion via variable-rate repos on Monday.

The RBI will now buy four bonds maturing between 2022 to 2028 bonds for a total of 150 billion rupees on March 26, bringing forward the auction date from March 30.

The RBI said on a review of the current liquidity and financial conditions, they have decided to advance the second trance of the OMO purchase.

Separately, as a pre-emptive measure to tide over any frictional liquidity requirements on account of dislocations due to COVID-19, the RBI said it would conduct 16-day variable rate repo auctions for 1 trillion rupees ($13.2 billion) in two equal tranches on Monday and Tuesday.

Over the weekend in India, the virus drove several companies to shut operations and the government sent states into lockdown, bringing normal life to a grinding halt. As of Sunday, India had registered 341 cases of coronavirus, with seven deaths.

As a special case, the central bank said it would also allow standalone primary dealers, the underwriters to debt sales, to participate in the repo auctions along with other eligible participants.

Though traders said the measures were likely to have limited impact in the current scenario, the benchmark 10-year bond yield touched the day's low of 6.24% after the announcement.

"The Reserve Bank will calibrate its operations to meet any need for additional liquidity support, if warranted, to ensure normal functioning of markets, promote staff welfare and preserve financial stability," the RBI said.