The Reserve Bank of India (RBI) stated on Thursday it will conduct third tranche of open market purchase of government securities and state development loans under G-sec Acquisition Programme (G-SAP 1.0).

The central bank will purchase government securities of Rs 40,000 crore on June 17. Of this, state development loans will be purchased up to Rs 10,000 crore, it said in a statement. The result of auctions will be announced on the same day and successful participants should ensure availability of securities in their SGL account by 12 noon the next day.

Under the second tranche, the RBI purchased Rs 35,000 crore under the G-SAP 1.0 on May 20 and purchased Rs 25,000 crore under first tranche on April 15. With the third tranche, the RBI will complete the Rs one lakh crore target announced for G-SAP in Q1. The programme's third tranche was announced in Governor's statement of June 4, 2021.

Sonam Chandwani, KS Legal & Associates Managing Partner expressed  "The RBI announced the 'G-SAP 1.0' to manage the yield curve and it is important to note that G-SAP would be run alongside RBI's regular operations including 'LAF, OMOs and Operation Twist'. With a view to enabling a stable and orderly evolution of the yield curve, the RBI is likely to commit upfront purchases of government securities."

"In addition to this, to ensure liquidity conditions move in accordance with RBI's cautionary stance in monetary policies, the apex bank will continue to deploy operations under 'LAF, reverse repo auctions, forex operations and OMOs'."