The Reserve Bank of India (RBI) on Monday announced its plan to buy bonds worth Rs 20,000 crore through open market operations (OMO) to support the government’s borrowing programme.
The central bank is expected to buy more at auctions to support the government’s huge borrowing programme.
This announcement comes in the wake of sharp jump in yields of government bonds over the past two weeks.
After the announcement, India 10-year bond yield eased to 6.034% as compared to previous close of 6.071%.
How to apply?
Eligible participants should submit their bids in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system between 10:00 am and 11:00 am on February 10, 2021.
Only in the event of system failure, physical bids would be accepted.
Auction Results
The result of the auctions will be announced on the same day and successful participants should ensure availability of securities in their SGL account by 12 noon on February 11, 2021.
Liquidity and Financial Condition
“On a review of current liquidity and financial conditions, therefore, the Reserve Bank has decided to conduct purchase of Government securities under Open Market Operations (OMO) for an aggregate amount of Rs 20,000 crore on February 10, 2021.”
Borrowings in 2021-22
The government will borrow Rs 12.05 lakh crore from the market in 2021-22, lower than the Rs 12.80 lakh crore estimated for the current financial year.
According to the Revised Estimate, the gross borrowing for the current financial year was raised to Rs 12.8 lakh crore as against the Budget Estimate of Rs 7.8 lakh crore, registering an increase of 64 percent.
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