RBI puts G-Sec worth Rs 10,000 crore up for auction next week
In an effort to mop up liquidity from the system, the Reserve Bank of India (RBI) will sell government bonds worth Rs. 10,000 crore in the open market next week. The RBI has decided to sell government securities under Open Market Operations after “an assessment of the current and evolving liquidity conditions”. Securities with maturity dates ranging from 2018 to 2035 will be auctioned on July 14 through multi price method. “There is an overall aggregate ceiling of ₹10,000 crore for all the securities in the basket put together. There is no security-wise notified amount,” the central bank said in a statement issued on Friday. Securities to be auctioned will bear interest rates ranging from 7.40% to 8.15%, the RBI said, adding that it reserves the right to decide on the quantum of sales of individual securities and accept bids for less than the aggregate amount of ₹ 10,000 crore. The move is aimed at maintaining the overnight call rate at par with the repo rate. The current repo rate—the rate at which banks borrow short-term money from central bank —is 7.25%. However, banks are said to be lending to and borrowing from each other for overnight period at the interest rate between 7.10 and 7.15%. Experts say that such trends could trigger volatility in the interest rate market.
July 11, 2015 | 6:57 pm IST.
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