The Center will buy back securities worth Rs 40,000 crore, the RBI said in a release.
According to the central bank, GS 2024 is 6.18%, GS 2024 is 9.15%, and GS 2025 is 6.89%, with maturities of November 4, November 14, and January 16.
“The value of individual securities within the aggregate limit of Rs 40,000 crore has not been notified. Auction of securities will be conducted on multi-price basis,” it added.
“Auction offers will be submitted in electronic form on the Reserve Bank of India Core Banking Solutions (E-Kuber) system between 10:30 am and 11:30 am on Thursday, May 9, 2024. necessary,” the release added. .
The bidding results will be announced on the same day and settlement will take place on May 10th.
What is this buyback?
The move would see the Center opting to repay a portion of the outstanding debt before the actual maturity date of the bonds. Share buybacks free up liquidity into the banking system. As of May 2, there was a liquidity shortfall of Rs 78,481 crore. “The government has a clear picture of its short-term funding, which suggests that this share buyback is an attempt by the government to redistribute liquidity,” said Vivek Kumar, an economist at Quanteco Research. Ta. .
“Some may interpret this as part of yield management. However, the RBI has alternative options with direct and indirect signaling possibilities,” Kumar said.
“Liquidity is tight and government spending is unlikely to increase before the new government takes office. This will also contribute to lower short-term interest rates,” said Alok Singh, head of finance group at CSB Bank. Stated.
The central bank is scheduled to pay the government an annual dividend in May, which will further improve the government's cash position.
