RBI to conduct purchase of government securities under OMO for ₹20,000 crore

The Reserve Bank has announced to conduct purchase of government securities under Open Market Operations (OMO) for an aggregate amount of 20,000 crore on February 10. This announcement comes in the wake of sharp jump in yields of government bonds over the past two weeks.

India 10-year bond yield eased to 6.034% as compared to previous close of 6.071%, after the announcement.

RBI kept policy interest rates unchanged at record lows on Friday, RBI Governor Shaktikanta Das assured investors that its stance on liquidity remained accommodative and that the government’s 12.06 trillion borrowing programme for the fiscal year starting April would be managed in a smooth and orderly manner.

In a statement, announcing its OMO operations, the central bank today said: “The Reserve Bank stands committed to ensure the availability of ample liquidity in the system in order to foster congenial financial conditions. On a review of current liquidity and financial conditions, therefore, the Reserve Bank has decided to conduct purchase of Government securities under Open Market Operations (OMO) for an aggregate amount of 20,000 crore on February 10, 2021.”

Eligible participants should submit their bids in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 10:00 am and 11:00 am on February 10, 2021. Only in the event of system failure, physical bids would be accepted.

The result of the auctions will be announced on the same day and successful participants should ensure availability of securities in their SGL account by 12 noon on February 11, 2021.

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