Daijiworld Media Network - Mumbai

Mumbai, Sep 21: The Reserve Bank of India (RBI) on Monday accepted bids worth Rs 25,000 crore in the second tranche of its ongoing open market operation (OMO) sales programme as it continued efforts to absorb surplus liquidity from the banking system.

The auction saw strong investor participation, with total bids amounting to Rs 84,982 crore, more than three times the notified amount. The response reflected sustained demand for government securities despite the RBI’s liquidity-absorption measures.

According to the auction results, the central bank accepted bids worth Rs 11,512 crore for the 6.10 per cent Government Security (GS) 2031 and Rs 8,758 crore for the 7.95 per cent GS 2032.

It also accepted Rs 2,300 crore of the 6.75 per cent GS 2029, Rs 2,250 crore of the 7.17 per cent GS 2030 and Rs 180 crore of the 7.17 per cent GS 2028.

However, the RBI did not accept any bids for the 8.28 per cent GS 2027.

The latest OMO sale comes amid comfortable liquidity conditions in the banking system. RBI data showed that surplus liquidity stood at around Rs 6.05 lakh crore as of September 20.

An OMO sale is a monetary policy tool used by the central bank to withdraw excess liquidity from the financial system. By selling government securities to banks and other market participants, the RBI absorbs surplus funds, helping it maintain control over short-term interest rates and broader monetary conditions.

The current liquidity absorption exercise is part of the RBI’s plan to conduct OMO sales worth Rs 1 lakh crore in three phases.

The first tranche of Rs 50,000 crore was conducted on September 17, followed by the Rs 25,000-crore auction on Monday. The final tranche of Rs 25,000 crore is scheduled for September 28.

Market participants said the RBI’s move indicates an effort to gradually normalise liquidity conditions following a sustained build-up of surplus cash in the banking system.