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RBI to conduct G-SAP auctions on Sept 23

The Reserve Bank of India (RBI) on Monday announced that it would conduct open market purchase of Government Securities (G-Secs) under its “G-Sec Acquisition Programme (G-SAP) 2.0” along with a simultaneous sale of G-Secs on September 23.

So far, under G-SAP, the RBI has only conducted standalone G-Sec purchases. But this time round, it is simultaneously conducting sale of G-Secs in view of ample liquidity in the banking system.

RBI will purchase three G-Secs of seven to 14 years tenor, aggregating ₹15,000 crore, under G-SAP 2.0 on September 23.

Simultaneously, the central bank will sell three short-term G-Sec, all maturing in 2022, aggregating ₹15,000 crore.

In the second quarter so far, the RBI has bought G-Secs aggregating ₹90,000 crore in four G-SAP auctions. After the September 23 G-SAP auction, it may conduct one more auction for ₹15,000 crore.

Marzban Irani, CIO-Fixed Income, LIC MF, said the simultaneous conduct of G-Sec purchase under G-SAP and sale of G-Sec will be liquidity neutral. However, it may push up short-term yields.

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