RBI scraps treasury bill sale

The Reserve Bank of India (RBI) has rejected all bids received in the latest auction of Treasury Bills (T-bills), marking the second such instance in over a year. Market participants said investors demanded yields that were 0.05–0.10 percentage points higher than previous auctions due to tight liquidity in the banking system.

The last time the central bank took a similar step was on February 21, 2025, when bids for 91-day and 182-day T-bills were also rejected.

What are Treasury Bills?

Treasury Bills, or T-bills, are short-term debt instruments issued by the Government of India to meet immediate funding needs. These instruments are part of the money market and are currently issued in three maturities: 91 days, 182 days, 364 days.

T-bills are zero-coupon securities, meaning they do not pay periodic interest. Instead, they are issued at a discount to their face value (₹100) and redeemed at par upon maturity. The investor’s return is the difference between the purchase price and the face value.

Auction Process

The RBI conducts T-bill auctions on its electronic platform, E-Kuber, which serves as its Core Banking Solution (CBS). Participants in these auctions typically include:

• Banks
• Primary dealers
• Institutional investors
• Retail investors

Why were bids rejected?

The rejection reflects a mismatch between: Investor expectations of higher yields, and the government’s willingness to borrow at lower costs. Tight liquidity conditions in the banking system have pushed investors to demand better returns, prompting the RBI to reject the bids rather than accept higher borrowing costs.