Norms for repurchasing Rs 40,000 cr high-coupon, long-term securities to be finalised
Chiefs of public sector banks are scheduled to meet the finance secretary on May 2 in Mumbai to decide on the norms for the proposed buy back of debt by the government.
The finance ministry, in consultation with the Reserve Bank of India, is likely to come out with the guidelines in the next few weeks. The first tranche of buy-back is to be kicked off next month.
The government is looking to buy back Rs 40,000 crore of high coupon, long-term securities in this fiscal. It plans to buy back the securities at a discount.
The discount is expected to reflect on the cost of illiquidity of the securities and the income-tax benefits that banks will avail of on the profits booked through the sale of these securities.
A senior banker said the pricing will hold the key for the buyback programme.
