The Reserve Bank of India (RBI) on Monday said that it will conduct special open market operations (OMO) of government securities worth Rs 10,000 crore. "On a review of current and evolving liquidity and market conditions, the Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for Rs 10,000 crore each on July 2," RBI said in a release. An open market operation is an activity by a central bank to infuse or suck out liquidity in the financial system.
The RBI will purchase long-dated securities with tenor between 7 to 13 years amounting Rs 10,000 crore using the multiple price auction method. Similarly, it will sell short-dated securities maturing October 2020 and April 2021.
"Eligible participants should submit their bids/offers in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 10:00 am and 11:00 am on July 02, 2020. Only in the event of system failure, physical bids/offers would be accepted. Such physical bid/offer should be submitted to the Financial Markets Operations Department," the central bank also said.
Meanwhile, RBI has approached the Centre seeking an extension of tenure of external members on its rate-setting panel until March, 2021 in the wake of the COVID-19 pandemic. The apex bank has written a letter to the Finance Ministry regarding this, which is considering it, government officials in the know of the matter told news agency Bloomberg. Three out of the six-member Monetary Policy Committee (MPC) are external delegates appointed to the panel for a term of four years and are not eligible for re-appointment, as per the rules.