RBI Announces Special OMO To Purchase, Sell Govt Securities Worth Rs 20,000 Cr

On Monday, the Reserve Bank of India (RBI) said that it will simultaneously purchase and sell government securities under Open Market Operation (OMO) for an aggregate amount of Rs 20,000 crore in two tranches of Rs 10,000 crore each.

The first auction is scheduled for 10 September 2020.

In the details provided on the first tranche, the central bank said the securities that would be purchased would be 6.18% GS 2024, 6.97% GS 2026 and 5.79% GS 2030. The securities to be sold on the same day would be 182 DTB 22102020, 182 DTB 29102020 and 182 DTB 06112020.

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

The result of the auctions will be announced on the same day and successful participants should ensure availability of funds/securities in their Current account/SGL account, as the case may be, by 12 pm on 11 September 2020.

The next tranche is scheduled for 17 September, RBI said, adding that it remains committed to conducting further such operations as warranted by the market conditions.

Dubbed as "operation twist", the simultaneously selling short term debt instruments to purchase long term government debt helps cool-off debt market yields to stimulate cash inflows in the economy and promote spending.