Reserve Bank of India Governor Raghuram Rajan has assured the market by saying that it would do open market operation to improve money supply as whenever there is a shortage in long term liquidity.
Open market operation or OMO is an important money supply tool for the central bank. It purchases government securities through OMO window to pump in liquidity when the system requires it and vice-versa.
There has been concerns over possible liquidity shortage due to advance tax outflows.
There has been concerns over possible liquidity shortage due to advance tax outflows.
Governor Rajan said it has been RBI's endeavour to maintain plentiful liquidity in the system.
"There are short-term, medium-term and long term liquidity. As and when we get a sense that long term liquidity is needed, we thought of OMO purchase," Rajan said in Kolkata after RBI's central board meeting.
The central bank infused Rs 10,000 crore on December 7 through OMO.
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