RBI auctions treasury bills under 'Market Stabilisation Scheme'

The Reserve bank of India (RBI) on Tuesday announced auctioning of Cash Management Bills worth Rs. 60,000 crore under the government's Market Stabilisation Scheme (MSS) to mop up extra liquidity from the system against the backdrop of demonetisation.

The Cash Management Bills for a notified amount of Rs. 60,000 crore was done using "Multiple Price Auction" method where the bills have the generic character of Treasury Bills.

After the withdrawal of the legal tender character of the Rs. 500/1,000 denomination notes with effect from November 9, there has been a surge in deposits with the banks, the RBI had said.

"In order to facilitate liquidity management operations by the RBI in the current scenario, the government has, on the recommendation of the RBI, decided to revise the ceiling for issue of securities under the MSS to Rs 6,000 billion," the RBI said in a statement.

As part of liquidity management exercise, the RBI had earlier asked lenders to temporarily maintain an incremental Cash Reserve Ratio (CRR) of 100 percent.