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RBI revises calendar for auction of treasury bills

RBI revises calendar for auction of treasury bills

T-bills, issued by the Indian government, are short-term debt instruments for its borrowing needs. They are highly liquid and secure investments with 91, 182, and 364-day maturity options. 

Business Today Desk
Business Today Desk
  • Updated May 18, 2024 11:12 AM IST
RBI revises calendar for auction of treasury billsReduced T-bill supply allows banks to have more cash available instead of investing in those instruments.

The Reserve Bank of India (RBI) has issued a revised timeline for the auction of Government of India treasury bills. The central bank has reduced the quantum of the government’s treasury bill sales and a new selection of bonds for the Centre’s buyback operations to aid in freeing up cash for banks. This has been done following interactions with lenders.

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"The Reserve Bank of India, in consultation with the Government of India, will have the flexibility to modify the notified amount and timing for auction of Treasury Bills depending upon the requirements of the Government of India, evolving market conditions and other relevant factors, after giving due notice to the market," the RBI said.

It added: "Thus, the calendar is subject to change, if circumstances so warrant, including for reasons such as intervening holidays. Such changes, if any, will be communicated through press releases."

After market hours on Friday, the Reserve Bank said that it would auction a total of Rs 72,000 crore worth of the government’s T-bills on a weekly basis between May 22 and June 26, as against Rs 1.32 lakh crore announced previously.

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T-bills, issued by the Indian government, are short-term debt instruments for its borrowing needs. They are highly liquid and secure investments with 91, 182, and 364-day maturity options. 

These securities are offered at a discount relative to their face value, indicating that they are sold at a price lower than their nominal worth. The discrepancy between the acquisition cost and the face value constitutes the investor's return on investment.

A decline in the issuance of Treasury bills releases additional liquidity for banks, which would otherwise have been allocated to these instruments. Notably, this reduction in T-bill borrowing aligns with the volume of bonds that the government plans to repurchase during its next buyback operation scheduled for May 21.

Published on: May 18, 2024 11:12 AM IST
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