MUMBAI: The Reserve Bank on Wednesday said the second tranche of open market purchase of government securities worth Rs 35,000 crore under the G-sec Acquisition Programme (G-SAP 1.0) will be conducted on May 20 with a view to enabling a stable and orderly evolution of the yield curve.
After the Monetary Policy Committee meeting last month, Governor Shaktikanta Das had announced that the RBI will conduct open market purchases of government securities of Rs 1 lakh crore under the G-SAP 1.0 in first quarter of the financial year 2021-22.
The first such auction of Rs 25,000 crore was held on April 15.
“…the Reserve Bank will conduct the second tranche of open market purchase of government securities of Rs 35,000 crore under the G-sec Acquisition Programme (G-SAP 1.0) on May 20, 2021,” the central bank said in a statement.
On May 20, the RBI will purchase seven government securities of different maturities amounting to Rs 35,000 crore. There will be no security-wise notified amount.
Under the programme, which will be for 2021-22, RBI will commit upfront to a specific amount of open market purchases of government securities with a view to enabling a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions, Das had said.
G-SAP will run alongside RBI’s regular operations including Liquidity Adjustment Facility (LAF), open market operations (OMOs) and Operation Twist.
Earlier this month, the RBI Governor had said the first auction under G-SAP 1.0 elicited an enthusiastic response as reflected in the bid-cover ratio of 4.1.
G-SAP has engendered a softening bias in G-sec yields which has continued since then. Das had said with system liquidity assured, the RBI is now focusing on increasingly channelising its liquidity operations to support growth impulses, especially at the grassroot level.