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India's Apex Bank Announces Liquidity Measure Worth $2.6 Bn to Support Financial System

© AFP 2021 / MONEY SHARMAThe Reserve Bank of India (RBI) logo is displayed on a wall inside the Reserve Bank of India in New Delhi on July 8, 2019.
The Reserve Bank of India (RBI) logo is displayed on a wall inside the Reserve Bank of India in New Delhi on July 8, 2019. - Sputnik International
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New Delhi (Sputnik): The Indian banking regulator has pumped in liquidity worth $127 billion to keep the Indian financial sector afloat after the Covid-19 pandemic hit the country in February.

India's banking regulator, the Reserve Bank of India (RBI) has announced open market operations (OMO) worth $2.6 billion.

OMO are a tool to manage liquidity in the financial system via the purchase or sale of government bonds. 

An RBI communiqué on Tuesday stated that the bank will conduct the OMO on 27 August and 3 September. 

"On a review of current and evolving liquidity and market conditions, the Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under OMO for an aggregate amount of $2.66 billion in two tranches of $1.33 billion each,” the bank said. 

Under simultaneous OMO, also known as an "operation twist", the RBI will buy long-term bonds and sell short-term bonds simultaneously in order to ensure it has adequate liquidity to support the economy through a period of enhanced lending. 

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