RBI to buy, sell govt bonds worth Rs 10,000 cr on Monday

The Reserve Bank of India (RBI) on Monday will simultaneously purchase and sell government securities worth Rs 10,000 crore under a special Open Market Operation (OMO).

Such exercises are done by the central bank when the proceeds from sale of short-term securities are used to buy long-term government securities or bonds in a bid to bring down interest rates on long-term securities.

"On a review of the current liquidity and market situation and an assessment of the evolving financial conditions, the Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under OMO for Rs 10,000 crore each on December 23, 2019," the Reserve Bank said in a release on Thursday.

The purchase will be for government securities worth Rs 10,000 crore for the instrument '6.45 per cent GS 2029'.

The RBI will sell '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' government securities.

The Reserve Bank reserves the right to decide on the quantum of purchase/sale of individual securities and to accept bids/offers for less than the aggregate amount, RBI said.

It also reserves the right to purchase/sell marginally higher than the aggregate amount due to rounding-off effects and accept or reject any or all the bid/offers either wholly or partially without assigning any reasons.

The eligible participants should submit their bids/offers in electronic format on the RBI's Core Banking Solution (E-Kuber) system between 10.30 a.m. and 12.00 noon on December 23, 2019, RBI said.

"The result of the auctions will be announced on the same day and successful participants should ensure availability of funds/securities in their current account/SGL account, as the case may be, by 12 noon on December 24, 2019," RBI said.