The Reserve Bank of India on 23 August 2013 announced the auction of two 48-days Government of India Cash Management Bills. As per the notification issued by the Reserve Bank of India, the auctions will be conducted using Multiple Price Auction method.
The Reserve Bank has also cleared that the competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber). Result of the auctions will be announced on the same day.
The Cash Management Bills will have the generic character of Treasury Bills and their sale will be subject to the terms and conditions specified in the General Notification No. F.2 (12)-W&M/97 dated 31 March 1998 issued by Government of India and as amended from time to time.
The Cash Management Bills will have the generic character of Treasury Bills and their sale will be subject to the terms and conditions specified in the General Notification No. F.2 (12)-W&M/97 dated 31 March 1998 issued by Government of India and as amended from time to time.
Details of the Cash Management Bills (CMBs) are given below:
Auction Date
|
Settlement/Issue Date
|
Date of Maturity
|
Notified Amount
| |
1
|
26 August 2013
|
27August 2013
|
14 October 2013
|
11000 crore
|
2
|
27 August 2013
|
28 August 2013
|
15 October 2013
|
11000 crore
|
Total
|
22000 crore
|
Cash Management Bills (CMBs)
The Government of India, in consultation with the RBI, took a decision of issuing Cash Management Bills (as a short-term instrument). The CMBs allow the Central Bank to meet the temporary cash flow mismatches of the Government of India. CMBs in India is a non-standard, discounted instruments that is issued for maturities less of less than 91 days and are regarded as the generic character of Treasury Bills.
CMB is a flexible instrument for a Central Bank as it is issued at times of requirement. It allows the Central Bank to have lower cash balances and issue fewer long-term notes. CMBs tend to pay higher yields than bills with fixed maturities, but their shorter maturities lead to lower overall interest expense.
The Government of India, in consultation with the RBI, took a decision of issuing Cash Management Bills (as a short-term instrument). The CMBs allow the Central Bank to meet the temporary cash flow mismatches of the Government of India. CMBs in India is a non-standard, discounted instruments that is issued for maturities less of less than 91 days and are regarded as the generic character of Treasury Bills.
CMB is a flexible instrument for a Central Bank as it is issued at times of requirement. It allows the Central Bank to have lower cash balances and issue fewer long-term notes. CMBs tend to pay higher yields than bills with fixed maturities, but their shorter maturities lead to lower overall interest expense.
ONIKA JAISWAL
PGDM IST YEAR, 2013-15 BATCH
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