RBI to purchase Rs 10,000cr of govt dated securities on March 20

The Reserve Bank of India (RBI) announced it will purchase up to Rs 10,000 crore of Government of India dated securities via an open market operation (OMO) on March 20.

The central bank issued a statement on March 18 saying it will carry out the purchase through a multi-security auction using the multiple price method.

It noted that amid heightening risks due to the coronavirus (COVID-19) pandemic, certain financial market segments have been experiencing a tightening of financial conditions as reflected in the hardening of yields and widening of spreads. "It is important to ensure that all market segments remain liquid and stable, and function normally," it said.

RBI is expected to buy up to Rs 10,000 crore in four gilts of 2-5 year tenors, as per CNBC-TV18.

Gilt-edged securities are high-grade bonds issued by governments. Tenor refers to the time-to-maturity of a loan or financial contract such as bonds/securities.