India · Capital Markets , Monetary Policy , Financial Services

India's RBI schedules Rs 1 lakh crore bond buys

The operations inject liquidity timed to offset approximately Rs 2 lakh crore of advance-tax outflows in mid‑March. Selling government securities for the OMOs reduces banks' holdings of high-quality liquid assets and weakens liquidity coverage ratios, which declined in Q3 (SBI's LCR fell to 125% from 144%).

Economic Times ·
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India's RBI announced open market operations (OMO) — auctions where the central bank buys or sells government securities to manage liquidity — totaling Rs 1 lakh crore in two Rs 50,000 crore auctions on March 9 and March 13 to offset about Rs 2 lakh crore of expected advance tax outflows.
Why it matters
Banks now face a binding choice ahead of mid-March: sell government securities into the RBI's OMO auctions and reduce their liquidity coverage ratio (LCR) — liquidity coverage ratio (LCR) — or hold high-quality liquid assets and source cash elsewhere to meet tax-driven outflows. Treasury and asset-liability management teams must set participation and pricing strategies around the auction clears.
Implications
  • — Banks' treasury and asset-liability management teams must decide whether to place bids in the Rs 50,000 crore OMO auctions on March 9 and March 13 — failing to secure cash via the auctions or alternative funding will leave them exposed to advance tax outflows.

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