The Reserve Financial institution of India will meet choose major sellers and banks on Tuesday, three merchants conscious of the developments instructed Reuters, amid issues that tightening liquidity within the banking system is pressuring the federal government bond market.
The assembly, although with out a formal agenda, is anticipated to concentrate on present market situations, the merchants mentioned, declining to be named as they don’t seem to be authorised to talk to the media.
The RBI on Friday cancelled an public sale of ₹11,000 crore ($1.25 billion) in seven-year authorities securities, triggering a seven-basis-point drop within the benchmark bond yield.
“Issues have modified sharply inside a number of days, and what we had thought could be a continued bull-run turned out to be a short-lived phenomenon, which should be worrying for them and will have led to Friday’s public sale cancellation,” one of many merchants mentioned.
All of the merchants mentioned the central financial institution could also be involved about prevailing yield ranges. The RBI didn’t reply to a Reuters e mail in search of remark.
Banking system liquidity has fluctuated between surplus and deficit over the previous two weeks, affecting bond market sentiment.
“The RBI positively feels yields ought to be decrease than what they at the moment are, and so they had additionally taken steps like tweaking the availability calendar and convincing States to borrow much less,” a second supply mentioned.
RBI Governor Sanjay Malhotra final month famous there may be room for bond yields to say no.
“Numerous measures have been contemplated on this regard, together with how the first G-Sec auctions might be held. The tenor of those authorities choices, not solely central authorities but in addition State authorities,” Malhotra mentioned. ($1 = 87.8950 Indian rupees)
Printed on November 3, 2025
