Mumbai - The Reserve Bank of India (RBI) will inject Rs 12,500 crore into the system through purchase of government securities on February 21 to increase liquidity.
The purchase will be made through open market operations (OMOs).
“Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of...government securities under OMOs for an aggregate amount of Rs 125 billion on February 21, 2019,” the RBI said.
The eligible participants should submit their offers in electronic format on the RBI core banking solution (E-Kuber) system on February 21.
The result of the auction will be announced on the same day and payment to successful participants will be made on the following day, RBI said.
The RBI also announced the payment of Rs 28,000 crore as interim dividend to the government, which has been looking at resources to roll out populist schemes ahead of general elections.
The RBI has in the past transferred its surplus profit or dividend to the government in August every year, including in election years in 2009 and 2014, after considering audited accounts for the year. RBI follows July to June year.
The central bank in a statement said its board approved Rs 28,000 crore payment to the government as an interim dividend after a "limited audit review".
This is the second straight year that the RBI has announced an advance payment to the government.
Last year, it paid Rs 10,000 crore in the interim dividend in March and a final dividend of another Rs 40,000 crore in August.
In August 2017, it had paid Rs 30,659-crore dividend, down from Rs 65,876 crore in the previous year. The government has been seeking about Rs 27,000 crore in dividend withheld in the past two financial years.