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NISHA Nayak made post

How will the RBI operation Twist improve the transmission of rates in the Indian economy?

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Mitali Bhutta answered.
7 months ago

Operation twist is the US model which India has incorporated into its own management of the financial system. This involves buying long term securities and selling short term securities in the market. The impact is already visible in the last few weeks with the long term yields coming down sharply after the bond buying. The government was forced to do the Operation Twist because the bank transmission of rates was still not happening. This would force transmission to the end customer. This move will also ensure that the customer gets lower rates. Over the last two Mondays, the RBI has done Twist worth Rs.10,000 crore each and a similar amount is expected to be repeated on 06 January also.