G-SAP 2.0: RBI to buy up to Rs 25,000 crore of 5 gilts on August 26

The gilts issued would be made by the central bank on August 26, the report read. This news floats in about a month after the RBI purchased government bonds via., the open market of Rs 20,000 crore.

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Reserve Bank of India (RBI) will purchase around Rs 25,000 crore equal to five government-issued long term stocks (gilts) under the Government Securities Acquisition Programme (G-SAP) 2.0, CNBC TV 18 reported this update on August 17.

The gilts issued would be made by the central bank on August 26, the report read. This news floats in about a month after the RBI purchased government bonds via., the open market of Rs 20,000 crore.

The current decisions taken by the RBI are a section of the first round of purchases under G-SAP 2.0.

On July 4, RBI Governor Shaktikanta Das had proclaimed that the central bank will organize the open market purchase of government securities worth Rs 1.2 lakh crore under the G-SAP 2.0 in Q2 of the financial year 2021-22 to aid the market.

In the April monetary policy review, the RBI had launched secondary market G-SAP 1.0. Under the programme, the central bank aimed to offer a specific amount of open market purchases of government securities to allow a stable and organized evolution of the yield curve amidst effective liquidity conditions.

“The auctions under G-SAP 1.0 have evoked keen interest from market participants, with bid cover ratios of 4.1 and 3.5, respectively, in the two auctions undertaken so far. The timing of the second auction was aimed towards replenishing the drainage of liquidity due to the restoration of the cash reserve ratio (CRR) to its pre-pandemic level of 4 per cent of net demand and time liabilities (NDTL), effective May 22, 2021,” Das had said.

Source Money Control
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