India’s Treasury Bill Auction Sees Softer Yields Across All Tenors Amid Liquidity Comfort

In its latest weekly auction, the Reserve Bank of India (RBI) successfully sold a total of 210 billion rupees worth of Treasury bills across three maturities, with yields easing slightly compared to the previous auction. This signals a stable short-term borrowing environment and reflects improved liquidity conditions in the banking system.

Key Auction Highlights:

91-Day T-Bills:

- Amount raised: 100 billion rupees
- Cut-off price: 98.6534 rupees
- Implied yield: 5.4749 percent
- Previous yield: 5.4976 percent
- Notable drop in yield suggests strong demand for ultra-short-term instruments

182-Day T-Bills:

- Amount raised: 60 billion rupees
- Cut-off price: 97.2941 rupees
- Implied yield: 5.5776 percent
- Previous yield: 5.6045 percent
- Mid-tenor bills also saw a mild yield compression, indicating investor confidence

364-Day T-Bills:

- Amount raised: 50 billion rupees
- Cut-off price: 94.7036 rupees
- Implied yield: 5.6080 percent
- Previous yield: 5.6349 percent
- Longest tenor in the auction saw the smallest yield decline, reflecting cautious optimism

Investor Sentiment & Implications:

The consistent softening of yields across all tenors points to a benign interest rate outlook and robust demand for government securities. This could be attributed to surplus liquidity, muted inflation expectations, and anticipation of a stable monetary policy stance in the near term.

Source: Reserve Bank of India auction data, September 24, 2025.

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