RBI’s OMO Auction Sees Strong Demand: ₹25,000 Crore Government Securities Purchase Boosts Liquidity

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The Reserve Bank of India (RBI) conducted a major Open Market Operation (OMO) on May 19, 2025, purchasing Government of India securities worth ₹25,000 crore to inject liquidity into the banking system. The move comes as part of the RBI’s ongoing efforts to ensure stable financial markets and support economic growth amid evolving domestic and global conditions.

Key Highlights:

Robust Market Response: The OMO auction drew overwhelming interest, with bids totaling nearly ₹71,194 crore-almost three times the notified amount-demonstrating strong demand from banks and financial institutions for government securities.
Cut-off Yields and Auction Method: The RBI used a multi-security, multiple price auction method, allowing market participants to bid competitively for various government securities. The central bank retains discretion over the quantum of purchase for each security and may accept bids below or above the aggregate amount as needed.
Liquidity Injection: This OMO is part of a broader liquidity infusion plan, with the RBI set to purchase government bonds worth ₹1.25 lakh crore in May across four tranches, including the May 19 auction. The central bank’s actions are expected to ease liquidity constraints, support bond prices, and stabilize yields.
Policy Context: RBI Governor Sanjay Malhotra emphasized the commitment to monitor liquidity and market conditions closely, taking further measures as required to maintain orderly financial markets.

The successful OMO underscores RBI’s proactive approach to managing liquidity and market stability, providing a positive signal to investors and the broader economy.

Source: Economic Times, Business Standard, RBI Press Release