Conversion or Switch operations

January 31, 2022

The Government of India recently held conversion operation. It is also called Switch operation. Under the operation, the government bought back securities from the Reserve Bank of India. These government securities were maturing in 2022-23, 2023-24 and 2024-25. These securities were bought for Rs 1,19,701 crores. And fresh securities are to be issued to make the transaction cash neutral.

About Switch operation

The transactions were made using Financial Benchmarks India Private Limited. These transactions were made with the objective of smoothening the liability profile. The liabilities are the amount of money owed to the individual or an organization.

Financial Benchmark India Private Limited

It was established during the sixth bi – monthly policy of the year 2017-18. With this, the financial benchmark India private limited took over certain responsibilities of RBI. They are dissemination of exchange rate of currencies, settlement of financial contracts. It basically fixes the financial benchmarks. The financial benchmarks are a standard against which the performance of mutual fund, security or investment manager is measured.

Government securities

They are the debt instruments. They are issued by GoI. The two categories of government securities are short term instruments that mature in 91 days, 182 days or 364 days and long term instrument that matures within 5 years to 40 years. The securities are cleared by the clearing Corporation of India Limited. These securities are issued through auctions conducted by RBI.

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