 "Govt bonds")
The Reserve Bank of India (RBI) repurchased Rs 10,512 crore worth of government bonds on Thursday, against the notified amount of Rs 40,000 crore. The central bank received bids worth Rs 53,333 crore at the auction. Market participants said that the RBI accepted bids only at Financial Benchmarks India Private Limited (FBIL) levels.
FBIL is an organisation in India responsible for administering and publishing various financial benchmarks, including interest rate benchmarks. These benchmarks are used as reference rates for financial products such as loans, bonds, and derivatives. The RBI regulates FBIL.
“The market was expecting that at least Rs 25,000 crore worth of securities would be mopped up by the RBI, but that was not the case. That is why there was a sell-off after the auction,” said a dealer at a state-owned bank. “The market moved up by one basis point (yield on benchmark bond),” he added.
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The securities scheduled for buyback were 6.18 per cent 2024, 9.15 per cent 2024, and 6.89 per cent 2025. The 6.18 per cent 2024 bond received the maximum bids worth Rs 28,464 crore, while the RBI ironically received the least amount of bids (Rs 437 crore) in the same security.
Most of the funds were picked up by state-owned banks and insurance companies, said market participants.
“Banks are more aware of the levels that should be bid at,” said a dealer at a state-owned bank. “Mutual funds did have the majority of the securities, but it was the banks who got most of the funds because they bid at the right levels,” he added.
Typically, mutual funds hold a substantial amount of short-term papers.
