RBI buys ₹10,000 cr worth long-term govt securities in 2nd special OMO1 min read . Updated: 30 Dec 2019, 07:30 PM IST
- Though RBI offered to sell four securities in the auction, it accepted bids for three securities only
- These special OMO auctions are similar to the US Federal Reserves' 'Operation Twist' aimed at faster transmission of policy rates
Mumbai: In the second special open market operation (OMO), the Reserve Bank of India on Monday bought ₹10,000 crore of long-term government securities and sold ₹8,501 crore of three short-term bonds.
The RBI had announced to purchase and sell simultaneously government securities under Open Market Operations (OMO) for ₹10,000 crore each, last week.
Though RBI offered to sell four securities in the auction, it accepted bids for three securities only.
In the OMO purchase of 6.45 per cent GS 2029, the 10-year benchmark security, the RBI received ₹25,698 crore worth of bids from the participants but accepted ₹10,000 crore of bids.
The RBI received 285 bids to purchase 6.45 per cent-2029 security but accepted only 151 bids. The cutoff yield at which bids were accepted was 6.4874 per cent.
The RBI offered to sell four government securities - 6.65 per cent GS 2020; 7.80 per cent GS 2020; 8.27 per cent GS 2020 and 8.12 per cent GS 2020 through OMO sale.
It accepted only ₹8,501 crore worth of bids for the three securities as against ₹38,551 crore bids it received in for four securities in the OMO sale auction.
In terms of number of bids, the central bank received 27 bids for 6.65 per cent GS 2020; 34 for 7.80 per cent GS 2020 and 29 for 8.27 per cent GS 2020 and but accepted 11, 12 and 8, respectively.
For 8.12 per cent GS 2020 security, the RBI received 49 bids but did not accept any bid.
In a similar auction held last week, the RBI had purchased and sold same securities in the market.
It had purchased ₹10,000 crore of long-term government security while sold ₹6,825 crore of four short-term securities. These special OMO auctions are similar to the US Federal Reserves' 'Operation Twist' aimed at faster transmission of policy rates, an analyst said.
The Reserve Bank of India has reduced repo rate by 135 basis points between February and October 2019 but there has been a delay in passing on the cut in repo rate by lenders.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.