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RBI scraps Rs 10,000-crore OMO, plans to conduct Operation Twist

Bond market participants were disappointed because the central bank in the past has refused to sell 10-year bonds at rates the market wanted the RBI to pay

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The central bank announced a special OMO of Rs 10,000 crore, to be conducted on October 1

2 min read Last Updated : Sep 25 2020 | 12:24 AM IST

The Reserve Bank of India (RBI) on Thursday refused to go ahead with its planned bond purchase from the secondary market, even as it received more than six times the bid for its Rs 10,000-crore open market operation (OMO).

Instead, the central bank announced a special OMO of Rs 10,000 crore, to be conducted on October 1, where it would simultaneously buy and sell bonds to keep system liquidity intact. In such special OMOs, the RBI buys long-term papers and sells short-term securities, an exercise also called ‘Operation Twist’ in market parlance.

Thursday’s exercise was, however, an outright purchase OMO, where the

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