- The RBI will purchase long-dated securities with tenor between 6 years and 10 years aggregating ₹10,000 crore
- Bankers see this as a move to neutralise liquidity in the system as RBI looks to bring down rates.
MUMBAI: The Reserve Bank of India on Thursday announced it will conduct purchase and sale of government securities under open market operations for ₹10,000 crore on 27 April.
The RBI will purchase long-dated securities with tenor between 6 years and 10 years aggregating ₹10,000 crore, while it will see short-dated securities maturing June 2020, October 2020 and April 2021. In March, RBI had conducted total OMOs worth ₹40,000 crore.
The benchmark 10-year bond yield slipped to 6.09% from 6.20% following the announcement.
Bankers see this as a move to neutralise liquidity in the system as RBI looks to bring down rates. “RBI is looking to buy liquid G-sec papers. It is expected to bring down rates even on corporate bond papers. This will force banks to pass on lower rates to customers,” said the treasury head of a public sector bank.
The central bank has in recent months used liquidity tools instead of rate cuts to bring down borrowing costs in the economy. It adopted a mix of the Federal Reserve-style ‘Operation Twist’ and the long-term repurchase operations (LTRO) that boost cash in the banking system
