In its second special open market operation (OMO), the Reserve Bank of India on Monday bought ₹10,000 crore of long-term government securities and sold ₹8,501 crore of three short-term bonds.
Last week, the RBI had said it would buy and sell government securities under OMO for ₹10,000 crore each, simultaneously.
Though the central bank offered to sell four securities in the auction, it accepted bids for only three. In the OMO purchase of 6.45% GS 2029, ie the 10-year benchmark security, the RBI received ₹25,698 crore worth of bids but accepted ₹10,000 crore worth. It also received 285 bids to purchase 6.45%-2029 security but accepted only 151 bids.
The cut-off yield at which bids were accepted was 6.4874%.
The RBI offered to sell four government securities — 6.65% GS 2020; 7.8% GS 2020; 8.27% GS 2020 and 8.12% GS 2020 through the OMO sale. It accepted only ₹8,501 crore worth of bids for the three securities as against ₹38,551 crore bids it received for four securities.
Separately, the RBI also proposed a reduction in the loan amount an urban co-operative bank can lend to a single entity and a group of borrowers to 10% and 25%, respectively, with an aim to prevent occurrences as with PMC Bank, caused by large exposures to one group.
Currently, urban co-operative banks are permitted to have exposures up to 15% and 40% of their capital funds to a single borrower and a group of borrowers, respectively.
Punjab and Maharashtra Co-operative Bank collapsed because of its huge exposure totalling ₹6,226.01 crore to Housing Development and Infrastructure Ltd Group firms.