On June 4, RBI Governor Shaktikanta Das had announced that the central bank will conduct an open market purchase of government securities of ₹1.2 lakh crore under the G-SAP 2.0 in the second quarter of 2021-22 to support the market.
What is a Government Security (G-Sec)?
Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments. It acknowledges the Government’s debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more). In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs). G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.
How are the G-Secs issued?
G-Secs are issued through auctions conducted by RBI. Auctions are conducted on the electronic platform called the E-Kuber, the Core Banking Solution (CBS) platform of RBI.
Commercial banks, scheduled UCBs, Primary Dealers, insurance companies and provident funds, who maintain funds account (current account) and securities accounts (Subsidiary General Ledger (SGL) account) with RBI, are members of this electronic platform.
For the second purchase of government securities, the RBI said "Eligible participants should submit their bids in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 10 am and 11 am on July 22, 2021".
The result of the auctions will be announced on the same day and successful participants should ensure availability of securities in their SGL account by 12 noon on July 23, 2021, the RBI added.
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