Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ News / India/  RBI announces a massive Rs1 trillion G-sec purchase programme
BackBack

RBI announces a massive Rs1 trillion G-sec purchase programme

So far, the RBI had been announcing standalone and special OMOs to bring down yields. The announcement of an OMO calendar will give much-needed clarity to the bond market which is staring at a Rs12 trln government borrowing

The RBI kept repo rate or its key lending rate at 4% while the reverse repo rate or its borrowing rate was left unchanged at 3.35%.Premium
The RBI kept repo rate or its key lending rate at 4% while the reverse repo rate or its borrowing rate was left unchanged at 3.35%.

MUMBAI: The Reserve Bank of India (RBI) on Wednesday announced a secondary market government security acquisition programme (GSAP 1.0) wherein the central bank will purchase government bonds worth Rs1 trillion from the secondary market in the first quarter of this fiscal. The first purchase of Rs25,000 crore will take place on 15 April.

“While laying out the liquidity management strategy for 2021-22, let me unequivocally state that the Reserve Bank’s endeavour is to ensure orderly evolution of the yield curve, governed by fundamentals as distinct from any specific level thereof. Our objective is to eschew volatility in the G-sec market in view of its central role in the pricing of other financial market instruments across the term structure and issuers, both in the public and private sectors," RBI governor Das said on Wednesday while announcing the monetary policy statement first by-monthly monetary policy statement of fiscal 2021-22.

Bond yields fell 1 basis point to 6.11% soon after the announcement. Traders said bond yields are unlikely to rise any further.

With this announcement, RBI has satisfied a long-standing demand of the bond market of anopen market operation (OMO) calendar. So far, RBI had been announcing standalone and special OMOs to bring down yields, refusing to divulge details of a calendar in advance. This move of announcing an OMO calendar will give much-needed clarity to the bond market which is staring at a government borrowing programme of Rs12 trillion this financial year.

Meanwhile, the RBI today kept interest rates unchanged, as was widely expected, and also maintained its accommodative monetary policy amid concerns that rising coronavirus infections could derail the nascent economic recovery.

The RBI kept repo rate or its key lending rate at 4% while the reverse repo rate or its borrowing rate was left unchanged at 3.35%.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Gopika Gopakumar
Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 07 Apr 2021, 11:25 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App