RBI announces fresh OMO for sale, purchase of govt securities for Rs 10,000 Cr each
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The Reserve Bank of India on Monday announced another ‘operation twist’, also known as open market operations (OMO), under which it conducts simultaneous sale and purchase of bonds.
“On a review of current and evolving liquidity and market conditions, the RBI has decided to conduct simultaneous purchase and sale of government securities under OMO for Rs 10,000 crore each on July 2,” the central bank said in a statement.
The RBI undertakes ‘operation twist’ to manage yields in the bond market. In other words, the plan is to raise short-term yields and lower long term yields. The RBI had conducted ‘operation twist’ several times in the past.
Meanwhile, former RBI deputy governor R Gandhi on Monday said the central bank needs to relook at rules restricting large corporates from promoting banks and allow single entity to hold up to 26 per cent by having the necessary safeguards.
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