Seven state governments, including those of Andhra Pradesh, Maharashtra and Punjab, will sell 10- year bonds through an auction to be conducted by RBI on February 5, to raise a cumulative amount of Rs 7,670 crore.
The central bank said that Andhra Pradesh would auction securities worth Rs 2,500 crore, Maharashtra - Rs 1,500 crore, Uttarakhand - Rs 1,100 crore and Gujarat - Rs 1,000 crore. Other states participating in the auction include Bihar (Rs 500 crore), Haryana (Rs 570 crore) and Punjab (Rs 500 crore).
"The auction will be conducted on the Reserve Bank of India Core banking Solution (E-Kuber) system on February 5, 2013," the apex bank said in a notification.
Up to 10 per cent of the notified amount of the sale of each of the stock will be allotted to eligible individuals and institutions subject to a maximum limit of one per cent of its notified amount for a single bid per stock.
"The state government stocks will bear interest at the rates determined by RBI at the auctions. Interest will be paid half yearly on August 6 and February 6 of each year till maturity," RBI said. In December, RBI conducted four Open Market Operations (OMOs) purchase of gilts to comfort the liquidity and infused Rs 39,057.13 crore into the system.
On January 24, RBI hiked FII (foreign institutional investors) investment limits in government securities and corporate bonds by $5 billion each, taking the total cap in domestic debt to $75 billion, with a view to bridging the current account deficit.
Further liberalising the norms, the three-year lock-in period for foreign institutional investors (FIIs) purchasing government securities (G-Secs) for the first time has been done away with, RBI had said.
The sub-limit of $10 billion for investment by FIIs and long-term investors in G-Secs stands enhanced by $5 billion, it said.
With increase of $5 billion in each of the two categories, FIIs and long-term investors can now invest $25 billion in G-Secs and $50 billion in corporate debt instruments, taking the total to $75 billion.
The government, which is battling a high current account deficit (CAD) - the gap between inflows and outflows of foreign funds - is trying to attract more foreign funds into the country.
