The Hindu Business Line : RBI reduces G-Sec auction amount

The Reserve Bank of India has reduced the amount of the government securities to be held on July 11 to Rs 7,000 crore from the scheduled amount of Rs 10,000 crore. In a press release issued on Thursday, RBI announced the sale of the 7.59 per cent G-Sec 2016 for Rs 5,000 crore and the sale of the 7.5 per cent G-Sec 2034 for Rs 2,000 crore.

The auction amount scheduled earlier for the 10-14 years G-sec was Rs 6,000 crore and for the G-Sec having tenure of over 20 years earlier was Rs 4,000 crore. "Taking into account all relevant factors, the government of India, in consultation with the Reserve Bank of India, has decided to reduce the size of auction for both securities," said the RBI press release.

Theoretically the move should have a positive impact, but it is unlikely as the market had already factored it in, said a treasury head with a public sector bank. "If this had not happened, it would have had a negative impact. At present there is hardly any trade happening in the G-Sec market. The current volumes do not allow for a good price discovery. The G-Sec market has dried up," the official said.

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