Budgetary provisions done, no more G-sec switch in FY22: RBI

Market participants say this means comfortable cash position govt's which is also reflected in cancellation of bond auction twice in this month

The Reserve Bank of India will not be conducting any more conversion of government securities in the current financial year as the budgetary provision for switches has been completed, the central bank said on Thursday.

“On a review, as the budgetary provision of switches for the current year has been completed, it has been decided, in consultation with the Government of India, not to conduct the switch auctions scheduled to be held in February and March 2022,” RBI said in a statement,

As per the issuance calendar for marketable dated securities, auction for switches of government securities is scheduled on the third Monday of every month.

Market participants said this means comfortable cash position government’s which is also reflected in cancellation of bond auction twice in this month.

On Monday, RBI cancelled the government securities auction scheduled on 18 February, after a ‘review of the cash balance position of the government’.

Bond yields which spiked after the Union budget announced a higher borrowing programme for FY23, softened after the cancellation of the auctions and ‘super dovish’ stance of the monetary policy during the bimonthly review of last week.