Core Viewpoint - The Reserve Bank of India (RBI) is set to conduct open market operations (OMO) to inject liquidity into the banking system, with purchases totaling ₹1 lakh crore in two tranches scheduled for March 9 and March 13, ahead of significant advance tax outflows [4]. Group 1: Banking System Liquidity - The current daily average surplus of banking system liquidity stands at ₹2.63 lakh crore in March, an increase from ₹2.53 lakh crore in February [4]. - During the advance tax period, an outflow of approximately ₹2 lakh crore is expected from the banking system, necessitating the OMOs to counter this outflow [4]. Group 2: Concerns Over Liquidity Coverage Ratio (LCR) - Market participants express concerns regarding the bidding levels for the upcoming OMO auctions, as banks may hesitate to sell government bonds, which are classified as high-quality liquid assets, due to the potential negative impact on their liquidity coverage ratio (LCR) [2][4]. - The LCR across banks has declined in Q3, attributed to strong credit growth outpacing deposit accretion, with a high credit-deposit ratio of 83% indicating pressure on banks' liquidity buffers amid robust loan demand [2][4]. - The State Bank of India experienced the sharpest decline in LCR, falling from 144% in Q2 to 125% in Q3 [2].
RBI plans Rs 1 lakh-crore bond buys to boost liquidity
The Economic Times·2026-03-07 02:01