RBI enhances Limit of SMOs on oil bonds

Mumbai, Jun 11 (UNI) The Reserve Bank of India today enhanced the overall ceiling of open market operations to Rs.1500 crore a day.

RBI had on May 30 set in place the Special market Operations for smooth functioning of financial markets and for overall financial stability in view of the systemic implications of the liquidity and other related issues currently faced by Public Sector Oil Companies arising from the unprecedented escalation in international crude oil prices.

Accordingly, it decided to conduct open market operations (outright or repo at the discretion of RBI) in the secondary market through designated banks in oil bonds held by public sector oil marketing companies in their own accounts subject to an overall ceiling of Rs.1000 crore on any single day. this limit has now been increased to Rs1500 crore a day.

It was also decided to provide equivalent foreign exchange through designated banks at market exchange rate to the oil companies.

These measures were adhoc and temporary in nature and would be reviewed on a continuous basis, RBI stated.

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