RBI to inject liquidity through Open Market Operations

Reserve Bank of India  said it will inject liquidity through Open Market Operations (OMOs) to deal with any shortage of cash in the system. RBI Governor D Subbarao told reporters at a press conference in Srinagar. He further said that RBI does not use foreign exchange to manage the liquidity situation.

Liquidity remained under pressure throughout 2012-13 because of persistently high government cash balances with the RBI and elevated incremental credit to deposit ratio for much of the year.

Last fiscal, the RBI injected liquidity to the tune of 1.5 lakh crore rupees through OMO purchase auctions.
Finance Minister P Chidambaram had termed the RBI's announcement on OMO as liberal. OMOs are the market operations conducted by the RBI by way of sale and purchase of Government securities to and from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis.
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