Mumbai, Oct 16 (IANS): The Reserve Bank of India (RBI) on Friday announced the purchase of state development loans worth Rs 10,000 crore under open market operations.

The auction will be conducted on October 22.

The RBI, in a statement, said that it has been decided to conduct a purchase auction of SDLs under OMOs for an aggregate amount of Rs 10,000 crore on October 22, keeping in view that this is the first ever OMO purchase of SDLs.

"Depending on market response, the size of the auctions may be enhanced in the subsequent auctions.

"Accordingly, RBI will purchase the SDLs... through a multi-security auction using the multiple price method."

Earlier this month, RBI Governor Shaktikanta Das, in the 'Statement on Developmental and Regulatory Policies', said: "In order to impart liquidity to SDLs and thereby facilitate efficient pricing, it has been decided to conduct open market operations (OMOs) in SDLs as a special case during the current financial year."

"This would improve secondary market activity and rationalise spreads of SDLs over the Central government securities of comparable maturities. This measure, along with the extension of HTM (Held to Maturity Category) till March 2022, should ease concerns about illiquidity and absorptive capacity for the total government borrowing in the current year."