RBI to conduct Operation Twist

The Reserve Bank of India recently made it public with an announcement that they will simultaneously purchase and sell Government securities under Open Market Operations (OMO) for an amount of Rs. 10,000 crore each beginning from 7th January 2021. The Reserve Bank of India also announced that the decision was made after a considerate review of the financial conditions and current liquidity. The Bank holds high value for taking considerate careful decisions. RBI has never recorded tasking a reckless decision just like they did with the simultaneous purchase of Operation Twist.

The simultaneous purchasing and selling of G-sec OMOs are now popularly called Operation Twist that majorly involves buying the securities of longer maturities along with selling the same value securities that have shorter maturities. The Reserve Bank of India also mentioned purchasing three government securities (G-sec) having different dates of maturity that would when combined make an aggregate of Rs. 10,000 crore on January 7th. They would also sell two of these securities of the same value using various price auction procedures. The RBI has further made it clear to all that the sole right to decide the quantum of selling/purchasing of the securities. It is to the Bank’s complete discretion where and how they do the agreements of the securities. The bank owes no explanation and will not consider the say of any external agency in determining the value of the securities. What they sell and purchase is up to the management of The Reserve Bank of India.

The Reserve Bank of India further announced that they will make no delays in announcing what securities were bought or sold. They will announce the results of the auction the same day to avoid any further deliberation and ensure full disclosure. The bank is known for its leadership abilities and with this Operation Twist, they wish to carry on the legacy.


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