Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday announced the second purchase of government securities worth Rs 35,000 crore under the G-sec Acquisition Programme (G-SAP 1.0) on May 20.
This will allow an orderly evolution of the yield curve as the second Covid-19 wave ravages the Indian economy.
The first purchase of Rs 25,000 crore in April received an enthusiastic response from the market, Das said, while announcing a slew of measures to provide relief to various Covid-19 hit segments of the economy.
The RBI will do a second purchase of government securities (G-secs) aggregating Rs 35,000 crore in two weeks, he said.
Das had announced on April 7 that the central bank will put in place what is termed as a "secondary market G-sec acquisition programme" or G-SAP 1.0 for the year 2021-22.
Under G-SAP 1.0, the RBI will commit upfront to a specific amount of open market purchases of government securities to enable a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions.
The Reserve Bank's objective is to eschew volatility in the G-sec market given its central role in the pricing of other financial market instruments across the term structure and issuers, both in the public and private sectors.
RBI Governor, in an unscheduled announcement on Wednesday, said the central bank will continue to monitor the situation from the resurgence of COVID-19 cases and deploy all resources. "We have to marshal our resources for fighting the virus with vigour," he added.
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today