The Reserve Bank of India (RBI) on Thursday announced for simultaneous sale and purchase of government securities worth Rs 10,000 each via open market operations (OMO). The sale and purchase of government securities will happen through an auction on December 23 to infuse liquidity.

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"After reviewing the current liquidity and market scenario, the RBI has decided to conduct simultaneous purchase and sale of government securities under OMO for Rs 10,000 crore each on December 23, 2019," the central bank notified on Thursday.

The central bank will purchase 6.45 percent of the G-Sec 2029 bond, aggregating to Rs 10,000 crore using the multiple price auction method. Meanwhile, it will sell four G-Secs of the 2020 series.

"The Reserve Bank will sell 6.65 percent GS 2020 security (maturity date of April 9, 2020), 7.80 percent GS 2020 (May 3, 2020), 8.27 percent GS 2020 (June 9, 2020) and 8.12 percent GS 2020 (December 10, 2020) for an aggregate amount of Rs 10,000 crore," the RBI said.

RBI after a review of the current liquidity and market situation and an assessment of the evolving financial conditions" decided to conduct the transactions.

The eligible participants can bid or submit offers in electronic format on RBI’s Core Banking Solution (E-Kuber) system between 10.30 am and 12.00 noon on December 23.

The result of the auctions will be announced on the same day and successful participants should ensure availability of funds or securities by the next day, RBI said.

The central bank clarified that it reserves the right to decide on the quantum of purchase or sale of individual securities and accept or reject any or all the bid either wholly or partially without assigning any reasons. It further said it has the right to accept bids for less than the aggregate amount and purchase or sell marginally higher than the aggregate amount due to rounding-off effects.

The simultaneous buying and selling of bonds will help boost short-term yields and bring down long-term yields. The bond yields have surged 25 basis points to 6.71 percent after the RBI held policy rates on December 5.

First Published:Dec 20, 2019 9:15 AM IST