RBI Completes Third Round Of Operation Twist
The Reserve Bank of India (RBI) logo is displayed on a wall inside the central bank’s regional headquarters in New Delhi, India, Monday, July 8, 2019. Photographer: T. Narayan/Bloomberg

RBI Completes Third Round Of Operation Twist

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In the third special open market operation in as many weeks, the Reserve Bank of India on Monday bought Rs 10,000 crore of three long-term securities while selling a same amount of three short-term bonds.

The RBI had announced to simultaneous purchase and sale of government securities under open market operations for Rs 10,000 crore each, last week.

Like last week, though the RBI offered to sell four securities in the auction, it accepted bids for three bonds. In the current OMO purchase auction, the RBI offered to purchase three securities including 10-year benchmark government bond, as against just one bond in the previous two auctions.

Also read: RBI Announces Third Round Of Operation Twist

It got bids worth Rs 64,505 crore for the three bonds but chose to accept only Rs 10,000 crore of bids under the OMO purchase auction.

It got 198 bids for 7.32 percent-2024 but accepted 12 bids and for 7.27 percent-2026 bonds the RBI received 163 bids and accepted only two bids.

The RBI received 224 bids for 6.45 percent-2029 security but accepted only 22 bids. It offered to sell four government securities-6.65 percent- 2020; 7.80 percent-2020; 8.27 percent-2020 and 8.12 percent-2020 through OMO sale. These securities were offered by the RBI in the previous two OMO sale auctions. It received Rs 47,540 crore of bids but accepted to sell Rs 10,000 crore of bids.

In terms of number of bids, the central bank received 26 bids for 6.65 percent-2020; 40 for 7.80 percent-2020 and 35 for 8.27 percent-2020 but accepted 7, 3 and 4 bids, respectively.

For 8.12 percent-2020 bond, it received 41 bids but did not accept any of them. In the previous two similar auctions, the RBI had purchased Rs 20,000 crore and sold Rs 15,326 crore of bonds. These special OMO auctions are similar to the U.S. Federal Reserves’ Operation Twist aimed at faster transmission of policy rates, an analyst said.

The RBI has reduced the repo rate by 135 basis points between February and October 2019 but there has been a delay in passing on the cut in repo rate by lenders.

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