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    RBI to conduct two GSAP auctions worth Rs 25,000 cr on August 12, August 26

    RBI to conduct two GSAP auctions worth Rs 25,000 cr on August 12, August 26

    RBI to conduct two GSAP auctions worth Rs 25,000 cr on August 12, August 26
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    By CNBCTV18.com  IST (Updated)


    The Reserve Bank of India, meanwhile, kept the benchmark repo rate unchanged at 4 percent while maintaining its accommodative stance.

    The Reserve Bank of India (RBI) will conduct two GSAP auctions worth Rs 25,000 crore on August 12 and August 26 to enable an orderly evolution of the yield curve, said RBI Governor Shaktikanta Das on Friday.
    "Our recent GSAP auctions that have focussed on securities across the maturity spectrum are intended to ensure that all segments of the yield curve remain liquid," Das said while announcing the third bi-monthly monetary policy.
    The Reserve Bank's secondary market G-sec acquisition program (G-SAP) has been successful in anchoring yield expectations while eliciting a keen response from market participants, he noted.
    ''We propose to conduct two more auctions of Rs 25,000 crore each on August 12 and August 26, 2021, under G-SAP 2.0. We will continue to undertake these auctions and other operations like open market operations (OMOs) and operation twist (OT), among others, and calibrate them in line with the evolving macroeconomic and financial conditions,'' he said.
    He further said that RBI will conduct fortnightly variable rate reverse repo (VRRR) auctions of Rs 2.5 trillion, Rs 3 trillion, Rs 3.5 trillion and Rs 4 trillion over the coming weeks.
    RBI has been conducting 14-VRRR auctions as the main liquidity operations. This was reintroduced on 15 January 2021.
    "We are increasing the quantum put under auction under VRRR window in response to market appetite," Das said.
    In parallel, access to the fixed-rate overnight reverse repo has been kept open, he said, adding markets have adapted and even welcomed the VRRR because of the higher remuneration it offers relative to the fixed-rate overnight reverse repo.
    To provide comfort to banks on their liquidity requirements, including meeting their Liquidity Coverage Ratio (LCR) requirement, RBI further said they will extend the on-tap Targeted Long-Term Repo Operations (TLTRO) scheme till December 31, 2021.
    The Reserve Bank of India's monetary policy committee, meanwhile, kept interest rates steady at record lows on Friday, as widely predicted.
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