The Union Government on Monday announced the auction of four government securities to raise Rs 15,000 crore in the second week of the current month. The auction will be held on on Friday 12, 2013, said a release by the Reserve Bank of India (RBI) on Monday.
The bond sales are a part of the government's budgeted borrowing programme. In its Union Budget 2013, the government had proposed to borrow Rs 6.29 lakh crore (gross) from the market to meet its expenditure. The effective net borrowing would be at Rs 4.84 lakh crore in 2013-14. In 2012-13, the government budgeted around Rs 5.70 lakh crore while the net borrowing was at Rs 4.70 lakh crore for the same financial year.
Nearly, 60% of the planned funds was expected to be mopped up in the first half in between April and September, 2013-14 by selling dated government bonds. The average borrowing size per week was decided to be Rs 15,000 crore. The government is expected to raise Rs.45,000 crore in April.
Following is the list of securities, which are stipulated for RBI auction at its Fort office in Mumbai:
(i) 7.83 percent Government Stock 2018 - notified amount of Rs 3,000 crore
(ii) 8.20 percent Government Stock 2025 - notified amount of Rs 6,000 crore
(iii) 8.97 percent Government Stock 2030 - notified amount of Rs 3,000 crore.
(iv) 8.83 percent Government Stock 2041 - notified amount of Rs 3,000 crore
"The result of the auctions will be announced on April 12, 2013 and payment by successful bidders will be on April 15, 2013 (Monday)," RBI said in the release on Monday.
"Both competitive and non-competitive bids for the auction should be submitted in electronic format on the RBI core banking solution system on April 12, 2013. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between 10.30 a.m. and 12.00 noon."
Will this add to liquidity pressure?
It is unlikely to exert any additional pressure on liquidity especially in the first month of a new financial year. According to Brinda Jagirdar - an independent economist and former chief economist at the State Bank of India, the government has started spending at the beginning of a new year. Moreover, its tax collections are now back into the banking system.
"This will offset the tightness in liquidity system. Hence, the liquidity sucking through such bond sales will not have much impact," she told moneycontrol.com.
Banks on Monday net borrowed around Rs 1.09 lakh crore from the RBI's daily borrowing window. It is called liquidity adjustment facility or LAF in banking parlance.
Also read: Bad loans to rise till Sept, downgrades over: India Ratings
saikat.das@network18online.com
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