These banks will have access to the rupee equivalent of 50 per cent of their RIB collections at 9.5 per cent, apart from brokerage fees. "If the brokerage is taken into account, the interest on the rupee loan will work out to less than 9.5 per cent. These banks will invest the fund in short-dated government securities offering anywhere between 11.55 and 11.75 per cent and earn a decent spread of 2.5 to 3 per cent," said an official from Bank of India.

Bankers are of the view that investment in the government securities market will be an attractive option as currently there are not many avenues available to deploy funds. "Most banks would like to invest in the infrastructure bonds but the priority for banks is thegovernment securities market," bankers said.

Experts closely tracking the money market are of the view that most banks in expectation of the huge inflow in the forthcoming week will actively participate in the Rs 3,000 crore five-year paper auction to be held on Thursday.

"However, looking at the volatility in the forex market, it is very likely that the RBI will fix the yield at a lower rate compared with the secondary market yield," said a money market dealer in a private bank.

The market expects a cut-off yield of between 11.70 and 11.75 per cent for the five-year paper. According to market sources, the five-year paper will not witness any devolvement as most bankers --who were not able to subscribe to the Rs 2,500 crore four-year paper last week -- will take part in the auction. "There is a lot of demand for short- and medium-term securities. Looking at the number of bids received for the four-year paper, it is clear that the five-year paper will also sail through smoothly," money market sourcessaid.

This is the third five-year paper to be floated this fiscal.

On July 1, the RBI offered a coupon of 11.75 per cent on a Rs 2,000 crore five-year paper of which Rs 960.31 crore devolved on the RBI. In April, the centre auctioned Rs 4,000 crore worth of five-year paper offering a coupon of 11.10 per cent.

For the new four-year auction held last week, the central bank received 196 bids worth Rs 7,711.60 crore and accepted 14 bids worth Rs 2,500 crore. Partial allotment by the central bank was to the tune of 66.92 per cent.

With the August 13 auction of the Rs 3,000 crore five-year paper, the centre will complete Rs 55,398.72 crore out of a gross borrowing programme of Rs 79,000 crore in the current fiscal.