On August 25, 2020, Reserve Bank of India (RBI) announced a simultaneous purchase and sale of government securities (G-Secs) under open market operations (OMO) for an aggregate amount of Rs 20,000 crore in two equal tranches of Rs 10,000 crore on August 27, 2020 and September 03, 2020 on account of current and evolving liquidity and market conditions.
- For the OMO held on August 27, the RBI bought longer-dated government securities maturing between 2024 to 2032 viz. 6.18%, 8.24%, 5.79% and 7.95% maturing on November 4, 2024, February 15, 2027, May 11, 2030 and August 28, 2032, respectively. On the other hand, it sold securities that mature between October and November, 2020.
- The securities for the second tranche auction on September 03, 2020 will be announced separately.
Key Points:
The central bank reserves the right to decide on the quantum of purchase or sale of individual securities, accept bids or offers for less than the aggregate amount, purchase or sell marginally higher or lower than the aggregate amount due to rounding off and to accept or reject any or all the bid/offers either wholly or partially without assigning any reasons.
The objective of simultaneous purchase and sale of G-secs is to raise short-term yields and lower long term yields.
Recent Related News:
On July 2, 2020, Reserve Bank of India (RBI) conducted the simultaneous purchase of Government Securities (G-Secs), maturing between 2027 and 2033, and sale of 182 day and 364 day treasury bills (DTBs) under Open Market Operations (OMO) for Rs 10,000 crore each. This OMO is a part of “Operation Twist” to ease pressure evolving liquidity and market conditions. The main purpose of the OMO is to bring down the yields at the longer end.
Static points about Reserve Bank of India (RBI):
It was established on the recommendation of the Hilton Young Commission.
RBI is responsible only for printing the currency notes. Minting of coins is done by the Government of India.
Dr.Manmohan Singh is the only Prime Minister to have also served as the Governor of RBI.
