Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday said that the G-Sec acquisition program (GSAP) is in addition to normal instruments in their toolkit for liquidity management.
"It is not a one-off measure. There will be more going ahead," he said while addressing a press conference.
"Our signals, actions and communication must be read together. G-SAP is different from the usual OMO calendar. We have conducted total OMOs of Rs 3.13 lakh crore in FY21," he added.
RBI has decided to put in place a secondary market Government Security Acquisition Programme (G-SAP) 1.0 for orderly evolution of the yield curve in FY22.
In the first quarter (Q1), the central bank will be conducting G-SAP aggregating Rs 1 lakh crore, where the first purchase of Rs 25,000 crore will be done on April 15, Das said.
"RBI will commit to upfront buying of G-secs. It will ensure financial stability and G-sec stability from global uncertainty," Das earlier said while making policy announcements.
According to him, RBI will continue to deploy its regular operations under the LAF, longer-term repo/ reverse repo auctions, forex operations and open market operations, including special OMOs, to ensure liquidity conditions evolve in consonance with the stance of monetary policy and financial conditions are supportive for all stakeholders.
LAF is Liquidity Adjustment Facility while OMO refers to Open Market Operations.
The central bank also announced that it will conduct 14-day Variable Rate Reverse Repo (VRRR) auctions of longer maturity as indicated in the Revised Liquidity Management Framework announced on February 6, 2020.
The amount and tenor of these auctions will be decided based on the evolving liquidity and financial conditions, RBI said.
The Monetary Policy Committee (MPC) of the Reserve Bank, meanwhile, held the repo rate at 4 percent in the April policy and retained its accommodative stance for as long as necessary amid rising inflation and elevated inflation.
