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RBI to conduct simultaneous purchase and sale of govt bonds on March 4

While RBI will purchase four government securities using the multiple price auction method, it will sell two government securities.

twitter-logoBusinessToday.In | February 24, 2021 | Updated 18:55 IST
RBI to conduct simultaneous purchase and sale of govt bonds on March 4
The central bank will purchase and sell government securities through multiple price auction method.

The Reserve Bank of India (RBI) will conduct simultaneous purchase and sale of government securities for an aggregate amount of Rs 15,000 crore each on March 4.

The central bank will purchase and sell government securities through multiple price auction method.

"On a review of current liquidity and financial conditions, the Reserve Bank has decided to conduct simultaneous purchase and sale of government securities under Open Market Operations (OMO) for an aggregate amount of Rs 15,000 crore each on March 04, 2021," the central bank said in a release.

While RBI will purchase four government securities using the multiple price auction method, it will sell two government securities.

Also read: RBI to conduct special OMO of Rs 10,000 crore on February 25

"The Reserve Bank will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly functioning of financial markets," it said.

Earlier this month, the RBI had announced simultaneous purchase and sale of government securities under OMO aggregating Rs 10,000 crore each on February 25.

RBI Governor Shaktikanta Das, in his address after the meeting of the Monetary Policy Committee on February 5, had said that the central bank will continue to maintain an "accommodative liquidity stance" to support growth in the economy battered by the COVID-19 pandemic.

The RBI's market operations amid the pandemic have dispelled illiquidity fears and bolstered financial market sentiment, he said. On government's market borrowing, Das said, the central bank will ensure "orderly" completion of Rs 12 lakh crore borrowing programme in a non-disruptive manner.

The government raises money from the market through bonds and treasury bills to fund its fiscal deficit. Finance Minister Nirmala Sitharaman, in her Budget speech, had pegged India's fiscal deficit at 6.8 per cent of GDP in financial year 2021-22, down from 9.5 per cent in 2020-21.

Also read: RBI Governor Shaktikanta Das raises 'major concerns' about cryptocurrency

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