The Reserve Bank of India (RBI) today slashed the size of the government bond auction scheduled to be held on July 11.A notification issued by RBI said the government bond auction, as part of the government borrowing programme, will be for an amount of Rs 7,000 crore, down from Rs 10,000 as per the scheduled government borrowing programme.The RBI had last month increased the auction size by Rs 4,000 to Rs 9,000 crore to suck out part of the excess liquidity from the banking system, following which bond prices fell sharply. The government had then said it had only advanced a part of the borrowing programme.Dealers said the amount has been brought down as the RBI had enhanced the size of the government borrowing programme earlier. Therefore, it does not want to the disturb the entire calendar and thus has adjusted the size in this auction.
