With the sale of the 20-year tap stock, the government has completed more than 95 per cent of its gross borrowing programme of Rs 79,000 crore in the current fiscal. The net borrowing programme has been pegged at 48,000 crore.

According to sources, Life Insurance Corporation contributed 90 per cent of the total amount. "Small quantums were put in by a few pension funds. Nationalised banks did not subscribe to the paper as they do not have such long-term liabilities," sources said.

Despite an attractive yield of 12.60 per cent, 35 basis points higher than the 10-year paper at 12.25 per cent and the 15-year paper at 12.40 per cent, banks are not interested in blocking their funds in such a long-term instrument, sources said.

"If a bank can receive an yield of 12.25 per centby subscribing to a 10-year paper, why should it invest in a 20-year instrument offering only 35 basis points more," dealers said.

At present, there is an excess supply of long-term papers in the market, sources said. The 10-year paper is traded at 12.21-12.22 per cent in the secondary market while there are no trades in the existing 15-year paper.

Players do not wish to increase their portfolio size as the gilts market is bearish, experts said.

Easy liquidity in the system has prompted the government to announce the 20-year paper sale, fund managers said.

The RBI had announced the sale of the 20-year 12.60 per cent tap stock on Friday as a part of the centre's borrowing programme in the current fiscal. The 15-year on-tap stock, sold in August, carried a coupon of 12.40 per cent.

This will be the fourth tap stock to be put on sale in the current fiscal. On June 16, the RBI sold two on-tap papers of 10 years (12.10 per cent) and six years (11.75 per cent) mopping up Rs 3,384.74 crore and Rs 1,645.57crore, respectively. Consequently, on July 17, the central bank sold a three-year tap stock at 11.55 per cent (Rs 2,898.72 crore).

The last tap stock offered this year was on August 20. The 15-year paper, carrying a coupon of 12.40 per cent, mopped up Rs 1,191.91 crore.

"The latest 10-year paper offered a coupon of 12.25 per cent while the similar maturity state government paper offered 12.50 per cent. At 12.60 per cent, investment in a 20-year paper is not attractive for banks," sources said.