EconomyGeneral Studies III

Government Securities Acquisition Programme (G-SAP)


The RBI has introduced a new program called Government Securities Acquisition Programme (G-SAP) through which it will buy government securities worth Rs 1 lakh crore in the first quarter of FY22.


To bring economy back on track and remove fears regarding the rising bond yields, the RBI decided to make the move.


G-SAP will run alongside RBI’s regular operations including Liquidity Adjustment Facility (LAF), open market operations (OMOs) and Operation Twist.

  • The G-SAP will provide better option for bond market even as borrowing by the government is expected to increase.

  • The move has been dubbed as similar to Operation twist where liquidity was withdrawn at the short end and injected at the long end.

Benefits of G-SAP

  • The G-SAP is expected to provide certainty to the bond market participants regarding the RBI’s commitment to support the bond market.

  • The programme will help in reducing the spread between the repo rate and the 10-year government bond yield. This will reduce cost of borrowing for centre and states.

  • The decline in bond yield is positive news for the equities market. It will manage liquidity and control bond price volatility.

Source: Indian Express; The Economic Times


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