The central bank's first buyback in FY27 received a muted market response, despite deficit liquidity in the banking system. The ₹30,000-crore bond buyback received bids of ₹7,694 crore.
Of these bids, the RBI accepted ₹7,388 crores. Banking system liquidity was in a deficit of ₹41,562 crore as of June 28. The daily average liquidity in June so far stood at ₹80,519 crore. The daily average surplus stood at ₹1.62 crores in May and ₹3.80 lakh crore in April, RBI data showed.
"Public sector banks usually participate in such auctions and many expect cash to come in due to FCNR(B) inflows. So, they did not sell these securities. Plus, these are short-term papers, which will mature in a year or so," said Alok Singh, head of treasury, CSB Bank.
The buyback auction had four papers - 7.33% GS 2026, 5.74% GS 2026, 8.15% GS 2026 and 8.24% GS 2027. Separately, the benchmark 10-year government bond yield eased two basis points to 6.75%, and was at its lowest since March 20.
The 10-year yield has eased over 22 bps so far in June, supported by a 20% decline in oil prices to $72 per barrel.
The fall in bond prices is also supported by overseas portfolio inflows into Indian government debt, which are at a record high in June at ₹40,000 crore, CCIL data showed.
