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RBI to suspend the GSAP system

  • Posted By
    10Pointer
  • Categories
    Economy
  • Published
    11th Oct, 2021

The Reserve Bank of India has decided to suspend the Government Securities Acquisition Programme (G-SAP).

Context

The Reserve Bank of India has decided to suspend the Government Securities Acquisition Programme (G-SAP).

What is GSAP?

  • GSAP is a dedicated cash-generating window where RBI buys large amounts of paper to invest in a banking system.
  • It also sold paper under the window to maintain the balance of the goods in the system.

G-Sec Market

  • Globally, the G-Sec market is the majority of the institutional market, where major stakeholders are banks and long-term investors, including investment funds, insurance funds, retirement funds.

The RBI's multi-faceted role as a monetary policy authority, manager of systemic liquidity, government debt manager, a regulator of interest rate and foreign exchange markets, a regulator of payment and settlement system, and overseer of financial stability makes the G-Sec market critical for the effective discharge of these responsibilities.

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