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regular-article-logo Saturday, 15 June 2024

Despite poor response in prior auctions, Centre bid to buy back bonds worth Rs 60,000 crore

The Reserve Bank of India (RBI) on Thursday had accepted bids of only ₹2,069.99 crore of the aggregate amount of ₹60,000 crore. Of this, the total amount offered by participants was ₹49,595.449 crore

Our Special Correspondent Mumbai Published 18.05.24, 10:45 AM
RBI

RBI File picture

The government has announced a third buyback of bonds later this week, even as its first two such repurchases had met with a poor response.

The buyback will be done through an auction on May 21 for a notified amount of 60,000 crore. The bonds that will be repurchased include 7.35 per cent 2024, 8.40 per cent 2024, floating rate bonds (FRB) 2024 and 9.15 per cent 2024.

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The Reserve Bank of India (RBI) on Thursday had accepted bids of only 2,069.99 crore of the aggregate amount of 60,000 crore. Of this, the total amount offered by participants was 49,595.449 crore.

Similarly, in the earlier auction conducted on May 9, the central bank had accepted bids of 10,512.993 crore compared with 40,000 crore of bonds offered for buyback.

Of this, the total amount offered by participants stood at 53,33.979 crore.

Bond market circles said that the participation was low as they did not want to take more losses.

Liquidity in the banking system continues to be in a deficit mode and it now stands at around 94,000 crore. This has been attributed to low government spending on account of the ongoing general elections. This is expected to widen in the coming days on account of GST outflows.

Meanwhile fresh data released by the RBI showed India’s forex reserves rising $2.56 billion to $644.15 billion for the week ended May 10.

In the previous reporting week, the kitty had increased $3.67 billion to $641.59 billion after three consecutive weeks of decline.

For the week ended April 5, the reserves had hit an all-time high of $648.56 billion. For the week ended May 10, the foreign currency assets, a major component of the reserves, increased by $1.48 billion to $565.65 billion.

Gold reserves increased $1.072 billion to $55.952 billion during the week, the Reserve Bank said.

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