On October 9, the RBI had said that to improve liquidity and facilitate efficient pricing, it has been decided to conduct OMOs in SDLs as a special case during the current financial year
The Reserve Bank of India (RBI) on Friday announced Open Market Operations (OMOs) in State Developments Loans (SDLs) for Rs 10,000 crore on October 22.
“It has been decided to conduct a purchase auction of SDLs under Open Market Operations (OMOs) for an aggregate amount of Rs 10,000 crores on October 22, 2020, keeping in view that this is the first ever OMO purchase of SDLs. Depending on market response, the size of the auctions may be enhanced in the subsequent auctions,” the RBI said.
On October 9, the RBI had said that to improve liquidity and facilitate efficient pricing, it has been decided to conduct OMOs in SDLs as a special case during the current financial year. The OMOs would be conducted for a basket of SDLs comprising securities issued by states, it said. At present, SDLs are eligible collateral for Liquidity Adjustment Facility (LAF) along with T-bills, dated government securities and oil bonds.
The RBI on Friday said it will purchase the SDLs through a multi-security auction using the multiple price method. There is no security-wise notified amount, the RBI said.The Reserve Bank reserves the right to decide on the quantum of purchase of individual securities, accept bids for less than the aggregate amount, purchase marginally higher/lower than the aggregate amount due to rounding-off and accept or reject any or all the bids either wholly or partially without assigning any reasons, the RBI said.