The on-tap issue received an overwhelming response and the mop-up is higher than market expectations.

With the sale of the three-year tap stock, the government completed Rs 43,898.72 crore out of a gross borrowing programme of Rs 79,000 crore. The net borrowing programme has been pegged at 48,000 crore.

The centre on Tuesday offered to sell the `on-tap' bond of three-year maturity. This is the third tapstock offered by the RBI in the current fiscal. On June 19, the Reserve Bank offered two on-tap bonds 10-year and six-year papers carrying coupons of 12.10 per cent and 11.75 per cent, respectively.

The RBI mopped up Rs 5,030.31 crore through the twin tap stocks. By offering the three-year paper at a market-driven yield, the central bank has given a signal that the short-term interest rates are expected to move inline with the market, senior bankers said.

"The coupon of the three-year on-tap bond is identical to that of the three-year security auctioned earlier this month, 32 per cent of which devolved on the RBI," said an I-Sec official.

The centre's move to issue another three-year government security followed the good response a similar maturity paper received at the RBI sale window.

The RBI sold the three-year paper above par at Rs 100.07. "Even in the secondary market, the three-year paper is traded above par," said a dealer from a private bank.