RBI Opens Liquidity Tap, Interest Rate Cut in Sight

Forex, money market operations to infuse ₹1.5 lakh crore into system over time

- Gopika Gopakumar

MUMBAI: Relief arrived for India's parched banking system on Monday as the central bank rolled out measures to pump up liquidity, setting the stage for a potential interest rate cut next week. The Reserve Bank of India (RBI) announced a set of forex and money market measures that will collectively infuse ₹1.5 lakh crore over time, amid a clamour for liquidity support.

The central bank said it will purchase government securities (G-Secs) worth ₹60,000 crore through open market operations (OMOs) in three tranches of ₹20,000 crore each. Through this measure, RBI will purchase G-Secs from the open market and inject liquidity into the system. The OMO auctions will take place on January 30, and February 13 and 20.