RBI to conduct first-ever OMO purchase of SDLs on October 22

By: |
October 16, 2020 5:34 PM

The central bank had decided to conduct OMOs in SDLs as a "special case" during the current financial year with an aim to improve liquidity and facilitate efficient pricing.

Depending on market response, the size of the auctions may be enhanced in the subsequent auctions, it added.Depending on market response, the size of the auctions may be enhanced in the subsequent auctions, it added.

The Reserve Bank of India on Friday said it will conduct first-ever Open Market Operation (OMO) purchase of State Developments Loans (SDLs) for Rs 10,000 crore on October 22, 2020.

The Reserve Bank had announced about the OMOs in the statement on Developmental and Regulatory Policies after the monetary policy meeting on October 9.

The central bank had decided to conduct OMOs in SDLs as a “special case” during the current financial year with an aim to improve liquidity and facilitate efficient pricing.

“It has been decided to conduct a purchase auction of SDLs under Open Market Operations (OMOs) for an aggregate amount of Rs 10,000 crores on October 22, 2020, keeping in view that this is the first-ever OMO purchase of SDLs,” it said.

Depending on market response, the size of the auctions may be enhanced in the subsequent auctions, it added.

At present, SDLs are eligible collateral for the Liquidity Adjustment Facility (LAF) along with T-bills, dated government securities and oil bonds.

The OMOs will be conducted for a basket of SDLs comprising securities issued by states.

The RBI will purchase the SDLs through a multi-security auction using the multiple price method. The result of the auction will be announced on October 22 itself.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Yes Bank lacked cost control; aim to cut op expenses by 20 pc in FY21: CEO
2Yes Bank’s Prashant Kumar: Covid has created problem on loan book, very difficult to estimate impact
3ICICI Bank shuts down operations in Sri Lanka