What changed
RBI reintroduced 182-Day Treasury Bills from FY 2005-06, with the first auction on April 6, 2005, and subsequent fortnightly auctions. State Governments, previously allowed non-competitive bidding only for 91-day and 364-day T-Bills, can now also bid non-competitively for 182-Day T-Bills. Investment in these T-Bills will count as eligible security for Special WMA facility.
What it means for you
State Governments gain a new avenue for short-term investment with the 182-Day T-Bill, enhancing their liquidity management options. For banks, this may increase demand for T-Bills in auctions, potentially affecting yields. The inclusion as eligible security for Special WMA could ease state government cash flow pressures, indirectly impacting bank lending to states.
What you must do
- Update internal systems to accommodate State Government non-competitive bids for 182-Day T-Bills from April 6, 2005.
- Inform treasury and government banking teams about the new fortnightly auction schedule for 182-Day T-Bills.
- Review state government WMA limits and collateral eligibility to include 182-Day T-Bills as eligible security.
- Monitor auction participation by state governments to assess impact on T-Bill yields and liquidity.
Who it affects
State Government treasuries and finance departments, Banks handling state government accounts and WMA facilities, Primary Dealers and other T-Bill auction participants, RBI's public debt management and monetary operations teams
When does the 182-Day T-Bill non-competitive bidding start for state governments?
The facility starts from FY 2005-06, with the first auction on April 6, 2005. Subsequent auctions will be held fortnightly on Wednesdays before non-Reporting Fridays, with payment on non-Reporting Fridays.
How does this affect state government borrowing from RBI?
Investments in 182-Day T-Bills will be counted as eligible security for availing Special WMA facility, potentially increasing state governments' access to short-term credit from RBI.
Which other T-Bill maturities already have non-competitive bidding for state governments?
State Governments were already permitted non-competitive bidding for 91-day and 364-day Treasury Bills before this extension.