RBI rejects bids for higher yields in 91-day treasury auction

MUMBAI: Reserve Bank of India (RBI) accepted less than the total Rs 9,000 crore on offer in the 91-day treasury bill auction on Wednesday, rejecting bids from banks and primary dealerships for higher yields.

Of the total Rs 31,318.27 crore competitive received, RBI only accepted Rs 8,158.27 crore at a cut off yield of 7.22%, which was less than the total Rs 9,000 crore worth bills on offer. This is the first time since May that the central bank had not accepted competitive bids less than the notified amount.

"This has happened after sometime because the central bank would not want to give a higher yield. But we should not read too much into it because the non-competitive bids received more than made up for it," said Prasanna Patankar, deputy MD at STCI Primary Dealership, a firm which trades in government securities.

Unlike government bonds primary dealers are not obliged to buy all the securities on offer if all the bids are not accepted in a treasury bill auction. Non-competitive bids which are from global central banks and state governments amounted to Rs 2,192.89 crore, all of which were accepted.