RBI To Infuse Rs 36,000 Crore Via Government Bonds On May 30
The auction will utilise the multiple price method, accommodating both competitive and non-competitive bids from a range of market participants.
The Reserve Bank of India is poised to inject another Rs 36,000 crore into the financial system through the re-issuance of two dated government securities.
The RBI has announced a sale or re-issue of two dated securities, for a notified amount of Rs 36,000 crore. The auction for these securities is scheduled for Friday and will be conducted by the RBI's Mumbai Office.
The government retains the vital option to absorb additional subscriptions of up to Rs 2,000 crore against each security, potentially increasing the total injection and further enhancing financial system liquidity, the central bank said in a release on Monday.
The first Government Security's notified amount is worth Rs 6,000 crore and the date of repayment is Dec. 9, 2027. The second GS with notified amount worth Rs 30,000 crore is set to be repaid by May 5, 2035.
The sale will strictly adhere to the terms and conditions outlined in the notifications issued on March 26. The auction will utilise the multiple price method, accommodating both competitive and non-competitive bids from a range of market participants.
All bids must be submitted electronically via the robust Reserve Bank of India Core Banking Solution (e-Kuber system) on Friday.
Non-competitive bids are to be submitted between 10:30 a.m. and 11 a.m., while competitive bids can be placed from 10:30 a.m. to 11:30 a.m. The results of the auction are set to be declared on the same day, with successful bidders required to make payments by June 2.
Primary Dealers interested in underwriting the Additional Competitive Underwriting portion can submit their bids through the e-Kuber system between 9 a.m. and 9:30 a.m. on Friday, according to the RBI.
These government stocks will be eligible for "When Issued" trading from Tuesday through Friday, providing market participants with an opportunity to trade the securities before their official issuance.
The bond purchases are in continuation of the RBI's recent measures to inject liquidity into the system. In March, it conducted OMO purchases of government securities worth Rs 1 lakh crore in two tranches of Rs 50,000 crore each.
The central bank also held a dollar-rupee buy/sell swap auction of $10 billion for 36 months. Besides, the central bank this week reduced borrowing costs by cutting the benchmark repo rate by 25 basis points and changing its neutral stance to accommodative.
