MUMBAI: To force the rate of interest in the economy to come down, the RBI on Thursday said it would buy government securities (G-Secs) of 10-year tenure and at the same time sell government bonds of up to one-year tenure, both worth Rs 10,000 crore each.
Globally known as ‘operation twist’, this is the second such operation by the central bank in as many weeks, slotted for December 30. With the benchmark yield on the 10-year
G-Secs at an elevated level for quite some time, despite a series of rate cuts by the RBI, economists were expecting this special manoeuvre in India could help transmission of rates in the economy.
Since February this year, the RBI has cut interest rate five times, by a total of 135 basis points (100bps = 1 percentage point). On December 23, the RBI had bought 10-year G-Secs worth Rs 10,000 crore but sold G-Secs of less than one-year tenure worth Rs 6,825 crore, thus infusing some extra liquidity into the system as well.
Source: timesofindia.indiatimes.com