RBI buys bonds worth Rs 35,000 crore under second tranche of G-SAP

The Reserve Bank of India’s (RBI's) second tranche of government securities acquisition programme (G-SAP) witnessed massive response as the central bank mopped up Rs 35,000 crore of the stock to ease the pressure on the market.

The central bank has been buying bonds both directly, and anonymously, from the market in order to keep the bond yields low.  

The difference between G-SAP and other modes of purchase such as open market operations (OMO), is that the central bank does not refuse to buy bonds. However, it does not also notify in advance how much of a particular bond, from the pre-announced basket of bonds, it would buy in the G-SAP.  

In the first tranche, the RBI had bought Rs 25,000 crore of bonds on April 15, the second tranche of Rs 35,000 crore happened on Thursday. The central bank is committed to buy Rs 1 trillion of bonds in the first quarter ending June, and will introduce more G-SAP versions in the coming quarters.  

On Thursday’s auction, the RBI bought bonds maturing between 2024 to 2035. It bought Rs 8,345 crore of the benchmark 10 year segment, followed by Rs 6,697 crore in the 8 year segment.  

However, the 10-year bond yields fell only about 2 basis points from its previous close, but remained below 6 per cent, which is the target of the central bank. The 10-year bond yields closed at 5.968 per cent.