On 23rd December 2020, the RBI will conduct the 3rd auction of State Developments Loans (SDLs) aggregating ₹ 10,000 crore under the Open Market Operations (OMO). Whereas, the result of the auction also will be announced on December 23 itself.
The RBI has conducted two Open Market Operations in State Development Loans covering all states/UTs for a cumulative amount of ₹ 20,000 crore.
In October the first-ever auction under OMOs in SDLs was conducted, and the second was in November.
RBI said in a statement that “It has now been decided to conduct another purchase auction of SDLs under Open Market Operations (OMOs) for an aggregate amount of ₹ 10,000 crore on December 23, 2020.”
The central bank will purchase the SDLs via a multi-security auction using the multiple price method. There is no security-wise notified amount. During the current financial year to improve liquidity and facilitate efficient pricing, The RBI had decided to conduct OMOs in SDLs as a “special case.”
At present, SDLs are eligible collateral for Liquidity Adjustment Facility (LAF) along with Treasury-Bills, dated Government Securities, and Oil Bonds.
In also addition, further, the statement said that “The RBI reserves the right to decide on the quantum of purchase of individual securities and accept bids for less than the aggregate amount.”