RBI to conduct purchase of Government securities under OMOs for Rs 20,000 crores

On a review of the current liquidity and financial conditions, the Reserve Bank of India (RBI) has said that it has decided to conduct the purchase of Government securities under Open Market Operations (OMOs) for an aggregate amount of Rs 20,000 crores on October 29, 2020.

OMOs in a general sense refers to the sale or purchase of government securities by the RBI to commercial banks with a view to adjust liquidity conditions in the economy. The State Development Loans (SDLs) are defined as securities issued by the states to manage their own finances.

In a press release issued on Thursday, the central bank said that SDLs will be bought through a multi-security auction.

RBI said that it reserved the right to:

1) Decide on the quantum of purchase of individual securities.

2) Accept bids for less than the aggregate amount.

3) Purchase marginally higher/lower than the aggregate amount due to rounding-off.

4) Accept or reject any or all the bids either wholly or partially without assigning any reasons.

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 October 29, 2020.

The RBI said that the result of the auctions will be announced on the same day and successful participants should ensure availability of securities in their Subsidiary General Ledger (SGL) account by 12 noon on November 2, 2020.

Reserve Bank also added that it will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly functioning of financial markets.