RBI Cancels T-Bill Auction: Yield Bids Rejected, Liquidity Aim
Why in the news
The central bank called off a T-bill auction after turning down every bid, since the yields offered were too high.
Key facts
- Action: RBI cancelled the T-bill auction and rejected all bids.
- Reason: high yields quoted in the bids.
- Aim: ease liquidity ahead of the financial year-end.
- Also intended to avoid signalling higher interest rates.
About Treasury Bills
| Feature | Detail |
|---|---|
| Nature | Short-term government securities |
| Issuer | Government of India |
| Tenors | 91, 182 and 364 days |
| Coupon | Zero-coupon |
Yield and price
Yield is the return on a bond. It moves inversely to price: when price rises, yield falls, and when price falls, yield rises.
Exam angle
- RBI Grade B: monetary policy, bonds, liquidity, bond yields and G-Secs.
- NABARD Grade A/B: monetary basics, liquidity and financial stability.
- UPSC Mains GS 3: monetary policy.