The Reserve Bank of India (RBI) did not sell any of its planned Rs 14,000 crore of the benchmark 10-year bond on Friday’s auction, which may indicate its discomfort in breaching the limit outstanding in the bond, and that a new 10-year bond could be coming any time soon, may be in the next auction itself.
The government has raised more than Rs 1.19 trillion against the existing bond, a limit after which a new paper is issued to ease the redemption pressure. The RBI, however, had paid underwriting fees for the existing 10-year paper, indicating its willingness to sell the bond. And so, experts say, it could be a late decision not to increase the volume.
In Friday’s auction, the RBI sold a little more than Rs 12,000 crore, less than half of the Rs 26,000 crore planned through three bonds.
Even here, the bond maturing in 2023, against which Rs 3,000 crore was planned, the primary dealers were forced to buy almost the entire stock, indicating the central bank’s displeasure of the market demand.
It, however, sold the entire Rs 9,000 crore and borrowed Rs 48 crore extra against a bond maturing in 2061, RBI’s cut-off statement showed.
Details on the auction were awaited at the time of filing the story.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.