Question:Recently RBI has announced the Indian version of ‘America’s Operation Twist’ –
(a) to bring down long-term interest rates
(b) to reduce NPA
(c) to improve the managerial structure of banks
(d) None of these
Answer: (a)
Related facts:
- On 19 December, the Reserve Bank of India decided to conduct its version of ‘Operation Twist’.
- It will be done through simultaneous purchase and sale of government securities under Open Market Operations (OMOs) for Rs 10,000 crore each.
- This step will boost the economy by bringing down long-term interest rates making loans less expensive.
- Operation Twist is the name given to a US Federal Reserve monetary policy operation, which involves the purchase and sale of government securities to boost the economy by bringing down long-term interest rates.
- It is the first time the RBI will conduct a special open market operation (OMO) of this kind.
- Bond yields have been rising since the RBI unexpectedly left its key repo rate unchanged earlier this month.
Links:
https://indianexpress.com/article/explained/reserve-bank-of-india-operation-twist-omo-6178883/
https://economictimes.indiatimes.com/markets/bonds/rbi-to-conduct-second-round-of-operation-twist-on-monday/articleshow/72983037.cms