RBI's 3rd tranche of open market purchase of Rs 40,000 cr G-Secs on Jun 17

The Reserve Bank of India (RBI) will be buying bonds maturing between 2026 and 2035 in its third tranche of the G-sec Acquisition Programme (G-SAP). 

The total size of the G-SAP programme would be Rs 40,000 crore, including Rs 10,000 crore of state development loans. The RBI will be buying bonds of 20 states in the G-SAP, which will be held on June 17. Out of its Rs 1 trillion reserved for this quarter, the RBI has already bought Rs 60,000 crore of bonds through two auctions.  

In G-SAP, the RBI commits to buy bonds and doesn’t cancel the auction as such, but it has no security wise limit, and therefore it can buy the lowest offered bids for bonds.  

The RBI will be buying six securities, but unlike last auction, it will not buy the benchmark 10 year bond. The liquidity for this particular paper is low now in the market as most of it has been bought by the RBI already under its various bond buying programmes.