RBI announces Rs 25,000 crore open market purchase on April 15 under G-sec Acquisition Programme
As part of the plan, the RBI will conduct open market purchase of Rs one lakh crore under the G-sec Acquisition Programme in Q1 2021-22 to enable a stable and orderly evolution of the yield curve.
April 08, 2021 / 04:50 PM IST
The Reserve Bank of India (RBI) on April 8 announced the purchase of Government securities worth Rs 25,000 crore under the Government securities purchase programme announced by governor Shaktikanta Das on April 7.
Announcing the monetary policy, the RBI governor, Shaktikanta Das, announced that the Reserve Bank will conduct open market purchase of government securities of Rs one lakh crore under the G-sec Acquisition Programme (G-SAP 1.0) in Q1 2021-22 with a view to enabling a stable and orderly evolution of the yield curve.
The first purchase of government securities for an aggregate amount of Rs 25,000 crore under G-SAP 1.0 will be conducted on April 15, 2021, the RBI said in a statement.
The RBI said the first phase of G-SAP purchase will happen using the multiple price method under which the bidders pay at the respective rate they had bid. The RBI has notified four securities for the G-Sec purchase in different maturities.
The RBI announced the G-SAP 1.0 to manage the yield curve. Under the programme, the RBI will commit upfront to a specific amount of open market purchases of government securities with a view to enabling a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions. “The endeavour will be to ensure congenial financial conditions for the recovery to gain traction. For Q1 of 2021-22, therefore, it has been decided to announce a G-SAP of Rs one lakh crore,” the RBI said.
The positive externalities of G-SAP 1.0 operations need to be seen in the context of those segments of the financial markets that rely on the G-sec yield curve as a pricing benchmark, the RBI Governor said.
In addition, the RBI will also continue to deploy regular operations under the LAF, longer-term repo/reverse repo auctions, forex operations and open market operations including special OMOs to ensure liquidity conditions evolve in consonance with the stance of monetary policy, the RBI Governor said.