RBI takes preventive measure to maintain liquidity

The country’s central bank on Monday said that it will inject more liquidity into the market for which, it announced long-term repo operations (LTRO) of Rs 1 lakh crore that will be carried out in two tranches.

Furthermore, Reserve Bank of India (RBI) will conduct open market operations (OMO) of Rs 15,000 crore, in which it will buy bonds from the secondary market from March 26 from March 30. Also, another OMO of Rs 15,000 crore will be conducted today. Resultant, the total OMOs in March will be at Rs 40,000 crore.

This preventive measure of RBI has been taken in the wake of COVID-19 to overcome any liquidity problems.

Meanwhile, US Federal Reserve has announced that to keep borrowing costs low, it will purchase an unlimited amount of bonds. Besides, International Monetary Fund (IMF) has warned that the impact of COVID-19 could lead to a recession that could be bad or even worse, similar to the crisis witnessed in 2008. However, IMF is ready to deploy its entire USD 1 trillion lending capacity and is looking at other available options too.