RBI to conduct 2 more OMOs; announces measures to foster orderly market conditions

Auctions would be conducted on September 10, 2020 and September 17, 2020.

"The RBI remains committed to conduct further such operations as warranted by market conditions," it said.

On August 25, RBI had announced a special OMO of govt securities of Rs 20,000 crore.

The RBI will also conduct term repo operations for a total of Rs 1 lakh crore at floating rates in the middle of September to assuage pressures on the market on account of advance tax outflows.

In order to reduce the cost of funds, banks that had availed of funds under long-term repo operations (LTROs) may exercise an option of reversing these transactions before maturity. Thus, the banks may reduce their interest liability by returning funds taken at the repo rate prevailing at that time (5.15 per cent) and availing funds at the current repo rate of 4 percent, RBI added.

Further, RBI decided to allow banks to hold fresh acquisitions of SLR securities acquired from September 1, 2020 under HTM up to an overall limit of 22 percent of net demand and time liabilities (NDTL) up to March 31, 2021 which shall be reviewed thereafter.

Currently, banks are required to maintain 18 percent of their NDTL in SLR securities. The extant limit for investments that can be held in HTM category is 25 percent of total investment.

On the recent appreciation of the rupee, RBI said, it is working towards containing imported inflationary pressures.

"The RBI remains vigilant about these developments. In support of the accommodative stance of monetary policy, the RBI is committed to ensuring comfortable liquidity and financing conditions in the economy," the statement added.