RBI announces OMO purchase of Rs 10,000-cr govt dated securities on 20 March; says all market segments should remain liquid, stable

The Reserve Bank of India (RBI) on Wednesday said it will purchase up to Rs 10,000 crore government securities through open market operations (OMO) on 20 March. The RBI said that it will make the purchase through a multi-security auction using the multiple price method, a statement said.

RBI to buy up to Rs 10,000 cr of 4 gilts via open mkt purchases (OMO) on March 20 (in the 2-5 year tenors) pic.twitter.com/CtHwTlkhkL

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Amid mounting coronavirus pandemic scare across the world, certain financial market segments have been experiencing a tightening of financial conditions as reflected in the hardening of yields and widening of spreads, the RBI said. The RBI said it reserves the right to decide on the quantum of purchase of individual securities, accept offers for less than or higher than the aggregate amount of Rs 10,000 crores (including due to rounding off) and also to accept or reject any or all the offers either wholly or partially without assigning any reason. [caption id=“attachment_3197810” align=“alignleft” width=“380”] File image of Reserve Bank of India. Reuters.[/caption] “It is important to ensure that all market segments remain liquid and stable, and function normally,” said the central bank. “There is no notified amount against any of these securities within the aggregate ceiling of Rs 10,000 crore set for the operation,” it added. The result of the auction will be announced on the same day and payment to successful participants will be made during banking hours on 23 March. Successful participants should ensure availability of the requisite amount of securities in their subsidiary general ledger accounts by noon on that date.