In its third tranche of Open market operation (OMO), Reserve Bank of India (RBI) had purchased long term bonds of Rs. 10000 crore and sold short-term debt maturing in 2020 which is worth the same. The maturity of the long term bonds was of 2024, 2026 and 2029.
In the first tranche, the bank had purchased securities worth Rs 10,000 crore and sold bonds worth Rs 6,825 crore. in the second tranche, RBI bought Rs 10,000 crore of long-term government securities and sold Rs 8,501 crore of three short-term bonds.
To bring liquidity in the market and lower the rates unconventional methods are now sought by the banks. In these operations, RBI reserves the right to accept or reject any or all the bids or offers either wholly or partially without assigning any reasons. With the benchmark 10-year G-Sec yield at an elevated level for quite some time, despite a series of rate cuts by the central bank, economists believe this special move could help transmission of rates in the economy. It is said that the response as received to the three rounds of operation twist of OMO was well within expectations. The objective of the programme announced is to moderate high long-term interest rates in the market by changing the yield curve.