In a related move, the RBI cut the yields on the 14-day treasury bills by 26 basis points to 6.27 per cent, sending a strong signal that it wants short-term money rates to be easy. The current repo rate is 6 per cent. By paring the yield on the 14-day T-bills, RBI has narrowed the gap between the repo and the shortest term T-bills bill to 27 basis points.

At the auction of the Rs 4,000-crore six-year paper, there was no devolvement on the primary dealers, satellite dealers or the RBI.

With this, the RBI has completed four auctions this fiscal and raised Rs 16,000 crore. Besides, it privately placed an eight-year paper for Rs 5,000 crore with the RBI. The RBI has a netborrowing target of Rs 55,000 and a gross borrowing programme of Rs 86,000 crore as projected in the interim budget.

The apex bank paid the primary dealers (PDs) an underwriting commission of 48 paise, which was much below the earlier payout of 68 paise. By cutting the underwriting commission, the RBI has given the indication that the coupon rates are likely to be market-driven at the future auctions.

The RBI received 205 bids for Rs 5,374.45 crore, out of which it accepted 178 bids for Rs 4,000 crore. It made partial allotment to 30 bidders and the weighted average yield was at 11.47 per cent. "The fact the RBI settled for 11.50 per cent despite the weighted average yield being 11.47 per cent gives a clear indication that the RBI wants to fix more market-related coupons for primary auctions," dealers said. At the auction of the 14-day treasury bills, out of a notified amount of Rs 100 crore, the RBI received three competitive bids for Rs 150 crore and two non-competitive bids for Rs 400 crore. The RBIaccepted two bids for Rs 100 crore and both the non-competitive bidders for Rs 400 crore. The cut-off price was hiked by 1 paise to 99.76, indicating a yield of 6.27 per cent.

Last week, the RBI cut the yield of the 14-day T-bills to 6.53 per cent from 7.32 per cent. There was no change in the yields of the 91-day T-bills.