Taking heed of the current market liquidity, RBI is all set to go for its third round of US-styled operation twist in which it will buy and sell government bonds of Rs. 10000 crore each to ease interest rates in the sagging economy. In a release RBI said, On a review of the current liquidity and market situation and an assessment of the evolving financial conditions, the Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for Rs 10,000 crore each on January 6, 2020".
Furthermore, the central bank said it has the authority to decide on the quantum of OMOs and might accept or reject any or all of the bids partially or wholly without giving any due reasons.
"The eligible participants should submit their bids/offers in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 10.30 a.m. and 12.00 noon on January 6, 2020," RBI said.
"Operation Twist" mechanism involves buying of long-term government debt securities from the proceeds garnered from selling short term instruments by the central bank. The process results in lowering of interest rates on the long term papers as demand for the same sees a surge.