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Rs. 12,000 crore to be infused by RBI through Open Market Operation

The government of India decided last June 22 that they will be buying government securities to ease the liquidity situation. This is one way where the Reserve Bank of India will pump in Rs 12,000 crore into the market through Open Market Operations.

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For the detail, the RBI will purchase government securities maturing in different years and to be specific it would be on 2018, 2021, 2030 and 2032. The interest rates for these securities would be as follows 8.24 per cent for 2018, 8.97 per cent for 2021, 8.97 per cent for 2030 and 7.35 per cent for 2032.

This will be held through a multi-security auction using the method known as the multiple price method. The bank had pump in an amount of Rs 11,194.25 crore in the system contrary to the amount they have mentioned which is about Rs 12,000 crore. According to the Reserve Bank Governor D Subbarao, since inflation is high, it is important that there would be monetary tightening in order to sustain growth amidst economic problems.

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