RBI to buy govt bonds up to Rs 9,000 cr

The Reserve Bank of India said it will buy dated government securities for Rs 6,000 crore with an option to purchase additional bonds worth Rs 3,000 crore.

Updated on: Feb 27, 2009, 23:22:18 IST

PTI | By HT Correspondent, New Delhi

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The Reserve Bank of India on Friday said it will buy dated government securities for Rs 6,000 crore with an option to purchase additional bonds worth Rs 3,000 crore.

"The RBI has decided to purchase dated government securities for an aggregate amount of Rs 6,000 crore with a green-shoe option to purchase up to 50 per cent of the notified amount through a price-based auction using the uniform price method on March 5," the apex bank said in a statement.

A green-shoe option is used to provide price stability to a security issue by increasing the sale or purchase transaction in case of high demand.

The central bank will conduct auction based open market operations (OMO) on Thursday and the settlement would be a day later on March 6.

OMO refers to the buying and selling of government bonds by RBI. The central bank uses it as a monetary tool to regulate money supply in the economy.

"The other details of the auction such as individual securities, modalities, etc, would be announced at market close on March 4," the central bank said.

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