Operation Twist: RBI to conduct open market operation on Dec 30

Reserve Bank of India has announced a special open market operation to conduct simultaneous purchase and sale of government securities for an aggregate amount of Rs 10,000 crore each on December 30.

The decision was taken after a review of the current liquidity and financial conditions, the RBI said in a statement.

On December 30, the RBI will purchase three government securities of different maturity dates aggregating to Rs 10,000 crore and sell two securities aggregating to the same amount using the multiple price auction method.

Simultaneous purchase and sale of government securities under OMOs, popularly known as Operation Twist, involves purchasing G-Sec (government securities) of longer maturities and selling an equal amount of G-Sec of shorter maturities.

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The Reserve Bank reserves the right to decide on the quantum of purchase or sale of individual securities. It also holds the right to accept bids or offers for less than the aggregate amount; purchase or sell marginally higher or lower than the aggregate amount due to rounding-off; accept or reject any or all the bids either wholly or partially without assigning any reasons; and the result of the auctions will be announced on the same day.

The eligible participants must submit their bids in electronic format on the RBI Core Banking Solution (E-Kuber) system between 10 am and 11 am on December 30.

Physical bids will be accepted only in the event of system failure, and they must be submitted to the Financial Markets Operations Department in the prescribed form obtainable from the RBI website before 11 am on December 30.

The result of the auctions will be announced on the same day and successful participants should ensure availability of funds or securities in their current account/SGL account by 12 noon on December 31.

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