The RBI has hiked the yield on the 14-day T-bills to 6.79 per cent from 6.01 per cent and the 91-day T-bills to 7.76 per cent from 7.51 per cent.

For the 14-day T-bills, the RBI received seven competitive bids worth Rs 525 crore out of which it accepted six bids worth Rs 475 crore for a notified amount of Rs 500 crore. Devolvement on the RBI was to the tune of Rs 25 crore.

For the 91-day treasury bills, the RBI received five competitive bids worth Rs 240 crore and one non-competitive bid worth Rs 100 crore for a notified amount of Rs 400 crore. The central bank accepted all the bids. Devolvement on RBI was to the tune of Rs 160 crore.

According to money market sources, theyields offered by the RBI are in line with the market rate. "The volatility in the forex market and the tight money market conditions have triggered the central bank to hike the yields on short-dated instruments," said a money market dealer from a nationalised bank.

There is a reasonable amount of liquidity in the system as the RBI has mopped up Rs 2,001 crore through its fixed-rate repo held on Friday, dealers said. "Currently looking at the tight interbank money market and the volatile forex market, banks do not have any avenue to deploy funds other than short-term government securities," a money market dealer said.

Last week, the RBI had slashed the cut-off yields of both the 14- and 91-day T-bills by 26 basis points each signalling a lower interest rate at the shorter end.