RBI to purchase seven G-Secs under G-SAP 2nd tranche

The Reserve Bank of India (RBI) on Wednesday said it will purchase seven government securities (G-Secs), maturing between 2024 and 2035, aggregating ₹35,000 crore under the second tranche of its G-Sec Acquisition Programme (G-SAP 1.0) on May 20.

The central bank’s purchase of G-Secs under the second tranche will be ₹10,000 crore more vis-a-vis the first tranche of purchase auction, which was conducted on April 15.

Under G-SAP 1.0, RBI has committed upfront to a specific amount (₹1-lakh crore in the first quarter of FY22) of open market purchases of G-Secs to enable a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions.

In a statement on May 5, RBI Governor Shaktikanta Das observed that the first auction under G-SAP 1.0 conducted on April 15, 2021 for a notified amount of ₹25,000 crore elicited an enthusiastic response as reflected in the bid-cover ratio of 4.1.

“G-SAP has engendered a softening bias in G-Sec yields which has continued since then. Given this positive response from the market, it has been decided that the second purchase of government securities for an aggregate amount of ₹35,000 crore under G-SAP 1.0 will be conducted on May 20, 2021,” Das then said.

With system liquidity assured, the RBI is now focusing on increasingly channelising its liquidity operations to support growth impulses, especially at the grassroot level, he added.

Meanwhile, the Government has announced the conversion/switch of 10 G-Secs for an aggregate amount of ₹20,000 crore (face value) on May 17, 2021.

Under the conversion/ switch, 10 G-Secs (carrying different coupon rates and maturity dates) maturing in 2022, 2023 and 2024, will be converted into as many destination Securities, maturing in 2033, 2035 and 2061.

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