RBI’s Major Move: To Infuse ₹40,000 Crore into Banking System via Government Securities Purchase

In a significant step to boost liquidity, the Reserve Bank of India (RBI) announced that it will purchase government securities worth ₹40,000 crore on April 17, 2025. This purchase is part of the RBI’s Open Market Operations (OMO) and marks the third such intervention in the current financial year. Earlier, the RBI conducted two similar purchases—₹20,000 crore on April 3 and another ₹20,000 crore on April 8.

Repo Rate Cut to Support Liquidity

Official data shows that since January 2025, the RBI has injected nearly ₹7 lakh crore into the banking system. In addition to OMO purchases, the central bank has also reduced the repo rate twice this year—once in February and again in April. These cuts have led to a decrease in lending rates offered by banks and Non-Banking Financial Companies (NBFCs), making loans cheaper for consumers and businesses.

To manage liquidity in the economy, the RBI employs various tools, including Open Market Operations, Dollar-Rupee swaps, and Variable Rate Repos.

What is Open Market Operation (OMO)?

Open Market Operations are a monetary policy tool used by the RBI to regulate money supply, control inflation, and support economic growth. Under OMO, the RBI buys government securities from the market, which injects liquidity into the banking system. This enables banks to lend more, stimulating economic activity.

Conversely, when there is excess liquidity in the system, the RBI sells government securities to absorb surplus funds, thereby tightening money supply and helping maintain financial stability.

OMO is a key instrument for the RBI to influence interest rates, inflation, and overall monetary conditions in the economy.