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RBI to sell Cash Management Bills raising Rs 15K for Government

The Reserve Bank of India will sell government cash management bill (CBM), short term sovereign securities, to raise Rs 15,000 crore as the government would need money amid increasing expenditures.

On Monday the central bank will auction those securities that will mature in next two months. Earlier in the year, it sold such papers as and when required.

“CMBs (announcement) show that the government expenditure is more than expected revenues,” said Piyush Wadhwa, head of rates trading at IDFC Bank. “Such move will impact the short terms yields marginally pushing them up.”

The government is seen extending its spending spree as the country attained world’s fastest growing economy tag.

The additional supply of papers is expected to raise yields in shorter maturity debt papers. Yields and prices move in opposite direction.

The government in consultation with the RBI, had decided to sell CMBs meeting the temporary cash flow mismatches of the government. CMBs in India are issued for maturities less than 91 days. They have the generic character of Treasury Bills, another short term sovereign securities that RBI sells routinely.




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