The Reserve Bank of India got bids worth more than double the notified amount in its third open market operation (OMO) purchase, as traders flocked to sell securities from their held-to-maturity (HTM) books, treasury executives said. The RBI accepted the full ₹50,000 crore it had notified while receiving bids over ₹1.25 lakh crore.
The auction was held in anticipation of a widening liquidity deficit due to outflows from the quarterly advance tax. All papers were sold at a discount to market prices, while the 10-year paper was sold at a slightly lower discount.
The RBI also conducted a 14-day variable rate repo (VRR) auction, along with daily VRRs, but these auctions have seen tepid demand due to it being temporary, experts said. The central bank announced an eight-day VRR auction for ₹1 lakh crore.
The discount in the auction on Wednesday was 30 paise, while the previous OMO auctions have seen discounts of 40-50 paise. The next OMO purchase was scheduled for March 18, where the liquidity deficit is expected to widen after quarterly advance tax-related outflows.
Cumulatively, the RBI has done ₹1.5 lakh crore of OMO purchases with an aim to infuse durable liquidity into the system. Average daily liquidity in March stands at ₹1 lakh crore, RBI data showed.
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