Tag: G-Sec

Latest News Today – RBI To Purchase Bonds Worth Rs 20,000 Crore On July 8

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RBI will buy government securities worth Rs 1.2 lakh crore between July-September 2021

The Reserve Bank of India (RBI) will undertake an open market purchase of government securities or G-Secs worth Rs 1.2 lakh crore under the G-Sec acquisition programme during the July-September period.

According to a statement issued by the Central bank, it will procure G-Secs through a multi-security auction and under the multiple price method. Subsequently, the first purchase of G-Secs for Rs 20,000 crore will be held on July 8, 2021.

The Reserve Bank has stated that it reserves the right to decide on the quantum of purchase of individual securities and also to accept bids for less than the aggregate amount.

It also reserves the right to purchase marginally higher or lower than the aggregate amount due to rounding-off and to accept or reject any or all the bids either wholly or partially without assigning any reasons.

The Central bank will purchase government securities through a multi-security auction using the multiple price method. 

The eligible participants have been asked to submit their bids in electronic format on the RBI Core Banking Solution (E-Kuber) system between 10 am and 11 am on July 8, 2021.

Physical bids would be accepted only in case of a system failure and these physical bids are to be submitted to the Financial Markets Operations Department of the RBI.

The result of the auctions will be announced on the same day and successful participants should ensure the availability of securities in their SGL account by 12 noon on July 9, 2021.

The RBI said the next purchase under the programme will be conducted on July 22 for Rs 20,000 crore.

In April, RBI Governor Shaktikanta Das had said that the Central bank will conduct the open market purchase of government securities of Rs 1 lakh crore in the first quarter of the financial year 2021-22. The first auction of Rs 25,000 crore was held on April 15.



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Latest News Today – Reserve Bank Of India (RBI) Announces G-SAP 2.0 Of Rs

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RBI Monetary Policy 2021: Central bank kept interest rates steady to maintain status quo

The Reserve Bank of India (RBI), in its bi-monthly Monetary Policy Committee (MPC) Statement, said that another round of the Government Securities Acquisition Programme (G-SAP 1.0) worth Rs 40,000 crore will be conducted on June 17. Out of this, Rs 10,000 crore will constitute the purchase of state development loans or SDLs. RBI Governor Shaktikanta Das said that the central bank does not expect the market to respond appropriately to the announcement of G-SAP 2.0. (Also Read: RBI Monetary Policy Highlights: Lending Rates Unchanged, Growth Projected At 9.5% )

The specific dates and securities under the G-SAP 2.0 operations will be announced separately. The Reserve Bank planned a G-SAP of Rs 1 lakh crore for the first quarter of the current fiscal.

In its first bi-monthly monetary policy committee for fiscal 2021-22 held in April, the Reserve Bank had announced the secondary market G-SAP 1.0 scheme. As part of the program, the central bank committed upfront to a specific amount of open market purchases of government securities to ensure a stable and orderly evolution of the yield curve amid comfortable liquidity conditions.

”The announcement of G-SAP 2.0 to the tune of Rs. 1.2 lakh crores will ensure adequate liquidity in the system. Upward revision of inflation rate will raise bond yields marginally in the short run,” said Dr. Rajeev Singh, Director General, Indian Chamber of Commerce (ICC).

Shaktikanta Das said in his statement that during the current year so far, the RBI has undertaken regular OMOs and injected additional liquidity to the tune of Rs 36,545 crore, up to May 31, which is in addition to Rs 60,000 crore under the G-SAP 1.0 scheme.

RBI Governor added that a purchase and sale auction under the operation twist was conducted on May 6, to facilitate the easy evolution of the yield curve. Meanwhile, the redemption of government securities worth around Rs 52,000 crore in the last week of May fully neutralised the cash reserve ratio (CRR) restoration.

”As part of its objective to ensure adequate liquidity, RBI has continued with its GSAP 1.0 programme for Q1FY22 with a scheduled Gsec purchase of Rs 40,000 crore in June and importantly, taking it forward with GSAP 2.0 with the planned acquisition of another Rs 1.2 lakh crore in Q2FY22,” said said Mr Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.

Along with the use of other tools such as OMOs and Operation Twist, these announcements are a clear message to the market participants that RBI would like to provide necessary support and facilitate a slightly downward bias on the bond yields,” he added.



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Latest News Today – All You Need To Know

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RBI Monetary Policy 2021: Shaktikanta Das kept key interest rates steady to maintain status quo

The Reserve Bank of India (RBI) Governor Shaktikanta Das announced in the Monetary Policy Committee (MPC) review today that the authority has decided to set up a secondary market Government Security Acquisition Programme or G-SAP 1.0, for the orderly functioning of the G-sec market and evolution of yield curve in the financial year 2021-22. In this regard, the central bank announced a G-SAP amounting to Rs 1 lakh crore in the first quarter of the current fiscal, and the first purchase of Rs 25,000 crore will be done on April 15. (Also Read: RBI Monetary Policy Highlights: Repo Rate Steady, Growth Projection Retained At 10.5% )

”RBI has delivered a dovish pause and reaffirms its accommodative stance and impetus to support the economic recovery. The central bank announced a secondary market G-Sec acquisition programme (GSAP 1.0), which indicates an intention to calendarize its G-sec purchases and will help to manage the yield curve and may help to reduce the term premium as well,” said Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life

”The RBI also intends to lengthen the tenor of variable repo rate auctions, thereby helping to manage the system liquidity depending on evolving conditions and keeping it stable (although the governor said it should not be read as liquidity tightening). Overall, the policy has been dovish as supported by fall in bond yields, and this should also benefit the equity markets by keeping borrowing costs in check for some time,” added Mr Reddy.

The RBI Governor said that the positive externalities of G-SAP 1.0 operations need to be reflected in those segments of the financial markets that rely on the G-sec yield curve as the main pricing benchmark. Additionally, the extension of Held-to-Maturity (HTM) dispensation opens up space for investments of more than Rs 4 lakh crore.

Mr Das explained that the central bank will continue to deploy the regular operations under the liquidity adjustment facility (LAF), the longer-term repo or reverse repo auctions, forex, as well as open market operations (OMOs). These operations will ensure that the liquidity conditions evolve in tandem with the accommodative policy and that the financial conditions are supportive for all stakeholders.

The objective of the Reserve bank is to erase volatility in the G-sec market, due to its central role in the pricing of the other financial market instruments across the term structure and issuers, both in the public and private sectors. 



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