The Reserve Bank of India (RBI) on Friday said it will undertake an Open Market Operation (OMO) to buy government securities of Rs 40,000 crore on April 17.
The move is to manage the changing liquidity condition in the financial system, as per an official statement by the central bank.
This bond purchase is in addition to the earlier announced Rs 80,000 crore of government securities made on April 1. Those securities are being purchased in four equal tranches of Rs 20,000 crore each, due on April 3, 8, 22, and 29. "Following consideration of prevailing liquidity conditions, the Reserve Bank has resolved to carry out an OMO purchase auction of Central Government securities of Rs 40,000 crore on April 17," the RBI stated.
The RBI intends to purchase various government securities under a multi-security auction using the multiple price procedure. Some of the bonds to be purchased include those with maturity between 2028 and 2039, such as the 7.37 per cent GS 2028, 7.32 per cent GS 2030, 6.54 per cent GS 2032, and 7.18 per cent GS 2033, among others.
The RBI clarified that there is no specific amount assigned to each security and retains the right to decide the quantum of each security to be purchased. Interested participants will be able to submit their bids electronically through the RBI’s E-Kuber platform from 9:30 am to 10:30 am on the auction day. If there is a system failure, physical bids will also be accepted.
The results of the auction will be declared on the same day, and successful bidders need to make sure that the securities are in their SGL accounts by 12 noon on April 21.
Reiterating its resolve to ensure financial stability, the RBI asserted that it will continue to keep a close watch on liquidity and market conditions and take necessary steps to ensure smooth liquidity in the financial system.
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