Mumbai, August 31: The Reserve Bank of India on Monday announced measures to foster orderly market conditions and stated that it will conduct the additional special open market operation. Also, RBI stated that it will conduct term repo operations for an aggregate amount of Rs 100,000 crores at floating rates in the middle of September to assuage pressures on the market.

Announcing the measures to ensure orderly market conditions and congenial financial conditions, the apex bank said it will conduct additional special open market operation involving the simultaneous purchase and sale of Government securities for an aggregate amount of Rs 20,000 crore in two tranches of Rs 10,000 crore each. The auctions would be conducted on September 10, 2020, and September 17, 2020. RBI Projects India's Growth at -4.5% for FY 2020-21.

Apart from this, RBI in its circular said that it will conduct term repo operations for an aggregate amount of Rs 100,000 crore at floating rates -- at the prevailing repo rate -- in the middle of September 2020. The apex bank aims that the latest move would assuage pressures on the market on account of advance tax outflows.

With this, the banks -- which availed funds under long-term repo operations (LTROs) -- may exercise an option of reversing these transactions before maturity. Following this, banks may reduce their interest liability by returning funds taken at the repo rate prevailing at that time -- 5.15 per cent, and availing funds at the current repo rate of 4 per cent.

Earlier on August 25, the RBI had announced special open market operations and had stated that it would continue to monitor evolving liquidity, market conditions and take measures as appropriate to ensure the orderly functioning of financial markets. The latest move by RBI has been done with a motive to revive the economy, mitigate the impact of COVID-19 and restore the economy to a path of sustainable growth while preserving macroeconomic and financial stability.

(The above story first appeared on LatestLY on Aug 31, 2020 05:03 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).