On Thursday, the Reserve Bank of India (RBI) will make a 25,000-crore open market purchase of government securities. The G-sec Acquisition Program will be used for this (G-SAP 2.0).
These purchases are being made to support the market, according to RBI governor Shaktikanta Das. G-SAP has also been successful in anchoring yield expectations while eliciting a strong response from market participants, according to him.
Das announced two auctions of 25,000 crore each under G-SAP 2.0 in his statement following the Monetary Policy Committee meeting. The first took place on August 12th.
On Wednesday, the central bank issued a statement announcing that five government securities would be purchased on Thursday. On the same day, the auction results will be announced.
What exactly is G-SAP?
To fund its fiscal deficit, the government uses dated securities and treasury bills to raise money from the market.
The RBI commits to a specific amount of open market purchases of government securities under G-SAP in order to enable a stable and orderly yield curve evolution while maintaining comfortable liquidity conditions.
The Liquidity Adjustment Facility (LAF), open market operations (OMOs), and Operation Twist are all part of G-SAP.
