Operation twist-III: RBI to buy, sell debt worth Rs 10,000 crore each; key details

The Reserve Bank of India (RBI) on Thursday said that it will conduct simultaneous purchase and sale of government securities under open market operations (OMO) for Rs 10,000 crore each on January 06, 2020. “The RBI will purchase and sell the securities using the multiple price auction method. 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,” RBI said in a  statement. The RBI on Monday bought Rs 10,000 crore of long-term government securities and sold Rs 8,501 crore of three short-term bonds. The RBI had announced to purchase and sell simultaneously government securities under OMO for Rs 10,000 crore each last week.

“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 06, 2020 (Monday),” RBI said in a statement.  The RBI reduced the repo rate by 135 basis points between February and October 2019 but there has been a delay in passing on the cut in the repo rate by lenders.

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“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 noon on January 07, 2020 (Tuesday),” it added. With the benchmark 10-year G-Sec yield at a higher level for quite some time, even as the central bank cut interest rates, economists believe this move could help pass on the benefits of the rate cuts and boost liquidity in the Indian economy.