The Reserve Bank of India (RBI) has increased the notified amount of the 364-day treasury bills from Rs 750 crore to Rs 1,000 crore effective from April 1. Dealers said the move will add liquidity to the secondary market of the treasury bill and facilitate higher trades. The apex bank had last year increased the notified amount from Rs 500 crore to Rs 750 crore.
A primary dealer said: "The main reason why the secondary market for T-bills are not deep is that amount of paper available in the market is too less. The move will help in removing that obstacle."
A section of dealers also said the step implies lesser government borrowings through dated securities. "as more of the borrowings will go as regular flows, it will help us to asses the market liquidity in a better way," a senior dealer with a private bank said.
The 364-day treasury bills are auctioned fortnightly on Wednesday, preceding the reporting Friday. With the notified amount of 364-day treasury bills at Rs 1,000 crore, the central government will now have to raise Rs 1,17,779 crore through dated papers, while the rest will be mopped up through treasury bills.