Visit http://indiaer.blogspot.com/ for complete details INDIA ECONOMICS: Government / RBI prepones redemption of securities to cool off interest rates and yields
I. Government prepones entire amount due for redemption for remaining FY11
- The Government / RBI has announced its intention to repurchase the securities due for redemption for the remaining part of FY11for an aggregate amount of Rs286b. Accordingly, RBI has already announced the first tranche of auction for a notified amount of Rs120bto be conducted on October 25 with next day settlement.
- The measure is similar to the repurchase scheme that was undertaken in June to ease liquidity situation. However, at that time, as against a notified amount of Rs200b only Rs91b was absorbed. While a large amount of bids were rejected in both tranches, the second tranche was undersubscribed.
- This time too, Government / RBI retains the flexibility to reject either partially or fully any bids received.
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