Tuesday, Mar 21, 2023

RBI Treasury Bill, Bond Auction Update: 7.2% On T-Bills Maturing In 6 Months, Up To 7.75% On State Govt Bonds 

Outlook Money

RBI Treasury Bill, Bond Auction Update: 7.2% On T-Bills Maturing In 6 Months, Up To 7.75% On State Govt Bonds 

The Reserve Bank of India (RBI) announces the auction of Treasury Bills (T-Bills) and State Government Bonds (SG) every week for retail customers 

The Reserve Bank of India (RBI) has announced the auction of its latest tranche of Treasury bills and state government bonds maturing in different months and years. 

The bidding for T-bills runs from March 17 to March 23, 2023. For the state government bonds, the auction will close on March 21. 

T-bills and SG bonds are government securities issued weekly to raise funds from the public for various developmental projects.  

Treasury bills, or zero-coupon securities, are issued in tenors of 91 days, 182 days, and 364 days. Conversely, the tenor of SG bonds could range from 10 to 20 years. 

Investors can choose any of these money-market instruments depending on their investing goals, timeline, and resources. 

Treasury Bill & Bond Auction 

RBI has announced an indicative yield of 6.7 per cent to 7.2 per cent on Treasury bills for the auction closing at 8:00 am on March 23, 2023.   

T-bill maturing in six months has the highest yield at 7.23 per cent, followed by one year and three months, at 7.21 per cent and 6.75 per cent, respectively. 

Likewise, the indicative interest rates on state government bonds range from 7.6 per cent to 7.7 per cent for different maturities.  

Assam is offering the highest rates at 7.75 per cent among some 15 states auctioning state government bonds this week. 

The bidding will close on March 21, 2023. 

Rising Interest Rates 

The interest rates on government securities have been increasing over the past year in line with the spike in RBI’s repo rate, which currently stands at 6.5 per cent.  

Banks and non-banking financial institutions are also currently offering attractive rates on fixed deposits and savings accounts to capitalise on customer demand. 

Experts believe the central bank may yet again raise the repo rate when its monetary policy committee (MPC) meets in April for its monthly session.  

While inflation may have been improving, the situation is far from ideal, which would be considered for any decision on the repo rate. This could be the last one in the current rate hike cycle before RBI starts bringing it down again to bolster economic activities, which may have slowed down due to the high lending costs.