Rbi Announces Auction Of 7-Year Paper

The Reserve Bank of India (RBI) has announced the auction of a seven-year paper for raising a sum of Rs 2,000 crore. The auction is scheduled for June 17.

Given the existence of excess liquidity to the tune of over Rs 5,000 crore, it is expected that the issue should sail through. All the securities issued this year are quoting at a premium because of banks have been flush with funds with little alternative avenues for deployment. The government has raised three-year money at 12.14 per cent, five year money at 12,69 per cent and paid 13.05 per cent for ten years. Till date, the government has raised Rs 9,000 crore by auctioning dated securities and another Rs 5,000 crore by privately placing 10-year paper with RBI.

 

At the shorter end, the apex bank has raised Rs 5,458.03 crore at the auction of 364-day treasury bills. In addition the mop-up by issuing 91-day treasury bills has been Rs 2,350 crore and at the first ever auction of 14-day T-bills held last week the response was to the tune of Rs 1,274 crore. Of the budgetted gross borrowing of Rs 52,693 crore the central government has already raised Rs 23082.03 crore. The fact that the government has succeded in raising nearly 44 per cent of its requirement within the first two months of the fiscal is due to easy liquidity and lower credit off take. In the current year, the aggregate deposits has grown by Rs 10,080 crore to stand at Rs 5,13,675 on May 23.