The rise in the yield on the 91-day treasury bills to 10 per cent at the last auction on Friday led to a substantial decline in the demand for the three month paper.
"Competitive bidders were allotted only a limited amount which is why not much trading could be concluded in the paper," an official with a foreign bank said.
With the sale of the 10-year 13.85-per cent central government security coming up on Monday, a marginal increase in the call rates could be on the cards.
According to a private banker, insurance companies and provident funds are likely to subscribe to the security. "Commercial banks will, at the most, put in Rs 1,300 crore, while the rest may come from the insurance companies," the treasury head of a private bank said.
Bankers, however, rule out a rise in the yield on the 364-day treasury bills. "The auction is likely to see an inflow of funds for the RBI to the tune of Rs 400 crore," a foreign banker said.
