Blitz Bureau
NEW DELHI; The RBI’s move to inject Rs 1.9 lakh crore has come as a big positive for banks, which is reflected in the rise in the stock prices of both private and public sector banks, as well as Non-Banking Financial Companies (NBFCs) on March 6.
The Nifty PSU Bank index rose 1.46 per cent, or 86.3 points to hit an intraday high of 5,976.75, while the Nifty Bank index increased 0.72 per cent, adding 349.15 points to hit an intraday high of 48,839.10. Similarly, the Nifty Private Bank index recorded a gain of up to 0.67 per cent in morning trade.
As part of the measures to infuse more liquidity in the banking system, the RBI has announced that it will conduct open market operation (OMO) purchases of Government securities worth Rs 1 lakh crore in two tranches of Rs 50,000 crore each. The first auction will be held on March 12 and the second by March 18.
Besides, the central bank has also decided to hold a dollar-rupee buy/sell swap auction of $10 billion for 36 months to be held on March 24. The measures are expected to infuse additional liquidity of Rs 1.9 lakh crore. The move comes ahead of an anticipation of tight liquidity conditions by the end of the current financial year (FY25) amid tax outflows and banks rushing to meet targets.
The RBI said it “will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions,” it said in a press release.
These measures will not only address frictional liquidity tightness in March but also the issue of durable liquidity which has tightened of late, according to Teresa John, economist at Nirmal Bang Institutional Equities.
“While liquidity will likely be neutral by end March, it may move to surplus as we enter into FY26 unless we continue to see dollar sales by the RBI,” John said. Transmission is also likely to improve significantly, she said, adding that corporate bond spreads had tightened despite rate cuts.
