RBI to conduct ‘Operation Twist’

The Reserve Bank of India (RBI) under the open market operations has announced a simultaneous sale and purchase of the government bonds.
This will be the first time in the country that the government bonds will be on simultaneous sale and purchase, the entire mechanism will be in line with an operation adopted by the United States Federal Reserve in 2011-12 financial year named “operation twist’ for making long term borrowing cheaper.
Under the operation, the central bank of India, RBI will sell short term securities to buy long-term government debt papers that will lead to ease of interest rates for the long term papers.
On Monday, 23rd December 2019, the RBI will conduct the purchase and sale of government bonds simultaneously by buying Rs 10,000 crore of government bonds maturing in 2029 and selling short-term bonds of Rs 10,000 crore maturing in 2020. The decision was taken by the Central Bank after assessing the evolving financial conditions and taking a review of the current market situation and liquidity.