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RBI announces Rs 20,000cr Open Market Operations on February 10

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RBI announces ₹20,000 crore open market operationsIn order to boost liquidity in the economy, On February 10, 2021, the Reserve Bank of India (RBI) purchase Rs 20,000 crore ($2.74 billion) of government securities under Open Market Operations (OMO).

  • This purchase will also boost government’s borrowing programme worth Rs 12.06 lakh crore which will initiate in April 2021.
  • This decision has been taken due to the increasing yields on government securities.

Following table shows the Government Securities (GS) to be bought by RBI:

Security Date of Maturity
6.18% GS 2024 4-Nov-2024
7.17% GS 2028 8-Jan-2028
5.77% GS 2030 3-Aug-2030
6.19% GS 2034 16-Sep-2034

What is OMO?

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.

Key Points:

–RBI uses its Core Banking Solution (E-Kuber) for accepting bids in electronic format on such purchases.

–The government will be borrowing Rs 80,000 crore more in the February-March 2021 period. The gross borrowing programme next year is of the order of Rs 12-lakh crore.

Additional Info:

–In the recent monetary policy by RBI kept the policy rates unchanged. The bank repo rate remains at 4.25% while the reverse repo rate is 3.35 per cent. The policy repo rate is 4 per cent.

–RBI projected India’s GDP to grow at 10.5% in 2021-22.

Recent Related News:

i.On January 1, 2021, the Reserve Bank of India (RBI) launched the January 2021 round of household surveys namely “Inflation Expectations Survey of Households (IESH)” and “Consumer Confidence Survey (CCS)” to represent inflation expectations and consumer confidence.

ii.On January 5, 2021, the Reserve Bank of India (RBI) announced the introduction of Legal Entity Identifier (LEI) for all payment transactions of Rs 50 crore and above undertaken by entities through Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT).

About Reserve Bank of India (RBI):

Formation– 1 April 1935
Governor– Shaktikanta Das
Headquarters– Mumbai, Maharashtra
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, and M Rajeswar Rao)