The Reserve Bank of India (RBI) has said that it would continue to conduct open market operation (OMO) purchase auctions of Rs 20,000 crore, as well as OMOs in State Development Loans (SDLs) to support market sentiment and assure adequate liquidity.
Since the announcements made after the Monetary Policy Committee meeting on October 9, the RBI has expanded the scale of outright open market operation purchases of Government of India securities from Rs 10,000 crore to Rs 20,000 crore per auction. It is also conducting OMO purchase auctions in SDLs. The total amount of OMOs conducted in the second half of 2020-21 has been of the order of Rs 66,305 crore so far. The RBI said the response has been positive in both primary and secondary market auctions.
The Reserve Bank has decided to conduct OMOs involving a simultaneous purchase and sale of government securities for an aggregate amount of Rs 10,000 crore each on November 12, 2020. Simultaneous purchase and sale of government securities under OMOs, popularly known as Operation Twist, involves purchasing G-Sec of longer maturities and selling equal amount of G-Sec of shorter maturities.
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