In order to help reduce the sovereign yields which are pushing prices up, the Reserve Bank of India (RBI) has asserted that it will buy back Rs 10,000 crore worth of government bonds. RBI will purchase the government bonds in the four different sets of securities on January 20, 2016.
Out of the total four securities, Central Bank will take two of the securities from the investors that are extremely liquid papers including the earlier benchmark bonds maturing in May 2025 and March 2030. This will help to create replacement demand of government bonds from investors, who shall have sold those to RBI. Furthermore, the buying back of long term papers is seen as a measure that should trigger a rally in sovereign bond yields.
During 2015, RBI had slashed interest rate by 125 basis points, but towards the end of the year, the benchmark bond yielded just five to 10 basis points at 7.70-7.80%, lower than the level seen at the beginning of the year.
Earlier, in December RBI had offered to buy four government securities for an aggregate value of Rs.10,000 crore through an auction on 7 December, saying that the move is based on its assessment of prevailing and evolving liquidity conditions. It was the first such auction since January 2014.
Start Research-backed Investing ...Now. Subscribe to Sapphire
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: