This is the largest devolvement on the RBI during the current fiscal. The overwhelming devlovement highlighted the central bank's stance of maintaining interest rates lower to push through a large chunk of the Centre's borrowing programme during the first half of the current fiscal.

The RBI received 172 bids for Rs 3,973 crore at the auction of which it accepted 11 bids for Rs 114 crore. Post-auction, the government has raised Rs 29,683 crore out of a gross borrowing programme of Rs 1,17,000 crore.

Dealers said the yield on the auctioned bond matched that of bond paper of similar tenor. The 12.32 per cent 2011 bond ended at Rs 108.47, steady from Saturday's closing levels, at an yield of 10.95 per cent.

Trading has been subdued in long-term paper, with most of the action shifting to the short end. Dealers attribute this to a glut of long term government paper floating in the market.

Dealers said they expected the RBI to sell the bonds through its sale window in the coming days.

The devolvement will allow the call money rates to hover around the RBI's refinance level of 7 per cent. The overnight interest rates was quoted around 8 per cent levels last week on account of outflows towards the "on-tap" sales of securities and open market operations (OMO) sales of treasury bills by RBI. The central bank kicked off OMOs through sales of treasury bills, which led to outflows of Rs 301 crore. The RBI had also mopped up Rs 2,680 crore through "on-tap" sales of the 10.79 per cent 2015 bonds.