You are here: Home » Economy & Policy » News
Business Standard

Yield on 10-yr state govt bonds eases by 26 bps after RBI's intervention

The weighted average cut-off for the 10-year SDLs eased by a sharper 26 bps to 6.63 per cent on October 13, 2020 over the previous weekly auction

Topics
State Development Loans | RBI | Government bonds

Abhijit Lele  |  Mumbai 

RBI
On October 9, the RBI unveiled measures to provide liquidity, boost dem­and for government bo­nds, and cool SDL spre­ads

The yield on 10-year state government loans (SDL) eased by 26 basis points at auction, showing the effect of Reserve Bank of India’s (RBI’s) steps to enhance liquidity for these bonds.

The weighted average cut-off for the 10-year SDLs eased to 6.63 per cent on October 13, over the previous weekly auction.

On October 9, the unveiled measures to provide liquidity, boost dem­and for government bo­nds, and cool SDL spre­ads. The central bank will also conduct Open Market Operations in SDLs. This subsequently led to a decline in the and SDL cut-offs.

Rating agency ICRA said state governments raised Rs 19,300 crore through SDLs in the auction held on October 13, which is 28.7 per cent higher than the initially indicated amount for this auction. It was 29.2 per cent higher than the year-ago level.

According to the RBI’s indicative calendar for market borrowings, plan to raise about Rs 2.02 trillion in the October-December period. The combined of 27 and two Union Territories rose by 57 per cent to Rs 3.53 trillion in the first half of the current fiscal year over the same period in FY20.

chart

The lockdown and the resultant restrictions imposed on the conduct of business and commercial activity over the past six months has led to a sharp decline in the revenues of states, pressuring their finances.

have been increasingly resorting to to meet their funding requirements, according to CARE Ratings. During April-September 2019, states had raised Rs 2.25 trillion.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, October 13 2020. 20:26 IST
RECOMMENDED FOR YOU
.