On Monday, the Reserve Bank of India (RBI) announced new open market Operations (OMO) for the purchase auctions of Government Securities of India, with an aggregate amount of Rs 1.25 lakh crore, as per the press release. This decision was taken after considering the “a review of current and evolving liquidity conditions” as stated by the central bank.
The purchasing of bonds in OMO will be done in four parts from 6th May 2025 to 19th May 2025.
| S.No. | Auction Date | Amount (in Rs Crore) |
| 1 | 6th May 2025 | 50,000 |
| 2 | 9th May 2025 | 25,000 |
| 3 | 15th May 2025 | 25,000 |
| 4 | 19th May 2025 | 25,000 |
This is the latest declaration by the RBI about open market operations (OMO) just after another notice for purchase of Rs 80,000 crore on 1st April 2025, followed by another Rs 40,000 crore government bond purchase announcement on 11th April 2025.
This kind of announcement for buying government securities in the open market operation (OMO) to inject liquidity is probably to support the bond yields, which have been on the rise after the terrorist attack in Pahalgam in the short term, as per some market participants.
The yield on the government securities, especially India’s 10-Year government bond, is been on the rise over the past few days after the terror strikes which took the lives of 28 tourists in Kashmir. This strike hurt some investors’ sentiment, as we witnessed some selling in the market.
“As the bond yields are going northward due to geopolitical tensions between India and Pakistan, the RBI has announced the OMO purchase so that it can inject liquidity and help bond yields to ease” as stated by Mataprasad Pandey, vice-president of Arete Capital Service.
Another thing to observe is that the central bank has sold a lot of dollars for rupees in the market to stabilize the falling value of the rupee in the past few months. Thus, it might now be trying to recover those rupees.
Nevertheless, it is a piece of good news for the banks, which already got their borrowing cost lowered in the recent repo rate cut of 25 basis points on 9th April 2025. Banks now they can now have more cash by participating and selling off these bonds to the RBI, which they can use for lending out loans at a lower interest to their customers, thereby increasing their numbers in loan books.
