17-04-2021 | 14:26 PM
G-sec acquisition programme
In its recent monetary policy briefing, the RBI announced a Rs one lakh crore Government Securities Acquisition programme (G-SAP 1.0.). The first purchase of Rs 25,000 crore is to be made on April 15, 2021.
About GSAP 1.0:
The RBI periodically purchases Government bonds from the market through Open Market Operations (OMOs).
The G-SAP is in a way an OMO.
But there is an upfront commitment by the RBI to the markets that it will purchase bonds worth a specific amount.
The idea is to give comfort to the bond markets.
In other words, G-SAP is an OMO with a ‘distinct character.’
Note:
A Government Security (G-Sec) is a tradable instrument issued by the Central Government or the State Governments.
It acknowledges the Government’s debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year- presently issued in three tenors, namely, 91 day, 182 day and 364 day) or long term (usually called Government bonds or dated securities with original maturity of one year or more).
