What changed
RBI clarified that Primary Dealers' bidding commitment for Treasury Bill auctions applies equally to Cash Management Bill auctions. Success in CMB auctions will now be included when calculating the minimum success ratio of 40% for Treasury Bills each half-year.
What it means for you
For PDs, this means CMBs are treated like T-Bills for bidding obligations and performance metrics, increasing the pressure to participate actively in these short-term auctions. Banks and lenders relying on PDs for government paper liquidity should note that CMBs now directly affect T-Bill success ratios, potentially influencing PD bidding behavior and market depth.
What you must do
- Ensure your PD bidding commitment for T-Bills covers CMB auctions as well.
- Track CMB auction success alongside T-Bill success to maintain the 40% half-yearly minimum ratio.
- Report CMB transactions in PDR returns together with T-Bill transactions.
Who it affects
Primary Dealers, Treasury operations teams at banks, RBI's debt management division
What are Cash Management Bills?
CMBs are short-term, non-standard discounted instruments issued by the Government of India for maturities less than 91 days, designed to manage temporary cash flow mismatches.
How does this affect the minimum success ratio for T-Bills?
Success in CMB auctions is now counted when calculating the 40% minimum success ratio for Treasury Bills each half-year, so PDs must include CMBs in their performance assessment.