RBI plans Rs 3 trillion in sovereign bond purchases to cap yield at 6%

India’s central bank will target to buy more than Rs 3 trillion ($41 billion) of sovereign bonds in the year starting April 1 to cap benchmark yields at about 6 per cent, according to a person familiar with the matter.

The Reserve Bank of India has so far bought about Rs 2.5 trillion of net debt in the current financial year. The figure will be as high as Rs 3 trillion by end-March as authorities are keen to shrink the spread between the 10-year bond yield and repo rate to around 150 basis points from more than 200 basis points, the