The Hindu Business Line : Market stabilisation scheme — RBI to issue bonds, T-bills for Rs 35,500 cr

THE Reserve Bank of India will issue bonds and treasury bills for Rs 35,500 crore under the market stabilisation scheme in the first quarter of the next fiscal year starting in April. This is in addition to the Rs 59,000 crore that the Central Government will raise in the first half of the coming fiscal.

RBI today released the borrowing calendar for the initial part of the coming fiscal.

The Government is to raise a total of Rs 60,000 crore through the market stabilisation scheme during the next fiscal year. These bonds will have all the characteristics of g-secs including that of SLR status. These funds when raised will be held in an account maintained by the RBI. This amount can be revised later to include more issuances depending on the liquidity condition, said the RBI.

In a notification release today, the RBI said that the Central Government would raise Rs 59,000 crore from the debt market in the first half of coming fiscal.

This is lower than the Rs 75,000 crore that was raised from the debt markets in the comparable period of the previous fiscal. Ten-twenty per cent of these issuances are likely to be floating bond issues based on the market response, said an RBI notification.

Market stabilisation bonds are instruments launched for the first time in the country to curb the excess liquidity in the system created due to the consistent dollar rain in the foreign exchange market and its absorption by the central bank.

Each time RBI buys up dollars, as it has been doing for the past several months, it releases the equivalent in rupees thereby contributing to the surplus liquidity in the system.

These bonds will help absorb the rupees.

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