 "Bonds rally on RBI bond purchase, UDAY clarification")
Indian bonds rallied on Friday after the Reserve Bank of India (RBI) announced a $1.75 billion bond purchase and said it would not allow debt issued by state governments as part of a bailout scheme for power companies to hit markets.
The benchmark 10-year bond yield was down 5 basis points at 7.81%, after falling as much as 10 basis points earlier.
The RBI said late on Thursday it would purchase bonds up to 120 billion rupees ($1.75 billion) through open market operations on March 3.
In addition, the central bank said on Friday state governments would issue debt under the so-called UDAY scheme to banks under a private placement, thus keeping the bonds outside of markets.
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