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Pratibha Rathore
Mumbai, May 21: The Reserve Bank of India (RBI) on Friday announced a calender for the auction of treasury bills with a fixed notified amount and date of auction for the whole year. The calender also includes the auction schedule of 182-day T-bills the notified amount of which has been pegged at Rs 100 crore. The first auction of 182-day T-bills will be held on May 26, 1999.
Going by the new calender, the auction of the 182-day T-bills will be held fortnightly on Wednesdays preceding the non-reporting Fridays and payments will be made on the Thursday (the day after the auction).
The notified amount fixed for the 364-day T-bills auction is pegged at Rs 500 crore.
The auction of 364-day T-bills will be held on fortnightly basis on Wednesdays preceding the reporting Friday and payment will be made on the following Thursday, an RBI rlease said.
The 182-day T-bills will be auctioned twice a month on alternate Wednesdays while the 364-day T-bills auction will take place on other two Wednesdays as has beenthe practice.
"In order to promote a six month benchmark rate and provide additional instrument for asset liability management, it has been decided to issue 182-day t-bills every fortnight in addition to other maturities," the release said.
"The central bank has, however, retained the right to vary the amount and timing if circumstances warrant without assigning any reasons," it said.
Formar RBI deputy governor S S Tarapore is not in favour of the introduction of 182-day T-bills as he thinks that it will hamper the 364-day T-bills market. However, RBI is of the view that the introduction of 182-day T-bills is necessary as it will help creating a proper yield curve.
"The money market participants will have a better idea of the liquidity position in the market," said an official from a primary dealership outfit.
Market sources are of the view that the introduction of a new instrument will expand the T-bills market and will help in deepening this segment.
Though reintroduction of 182-day t-billson a fortnightly basis was proposed in the first half of the 1998-99 credit policy it was not introduced. The April 1999 credit policy announced the reintroduction of 182-day t-bills.
Currently the state governments are permitted to invest their surplus funds in 14 and 91 day T-bills as non-competitive bidders. In a bid to give filip to the T-bills market and provide the state government more flexibility in their investments of surplus funds, the central bank has decided to permit state governments to put bids on non competitive basis in the auction for 182-day and 364-day T-bills.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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