Monday, November 29, 1999

Liquidity crunch: Govt to prematurely buy Rs 20K-cr bonds

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Mumabi, June 16 (PTI) The Reserve Bank today said the government will prematurely buy back three types of bonds worth up to Rs 20,000 crore beginning Friday, as liquidity has come under pressure due to much higher 3G and broadband spectrum licence fees, and the first quarter advance tax. The government will repurchase bonds, two of which would have otherwise matured later this year and the other next year. One of these bonds carries 12.25 per cent coupon rate, the other 11.30 per cent, and the third one 6.57 per cent. The government will buyback bonds worth Rs 10,000 crore on June 18, and the settlement will take place on June 21. The next repurchase programme is yet to be finalised. "The government of India hereby notifies the repurchase of 12.25 per cent Government Stock 2010, 11.30 per cent Government Stock 2010 and 6.57 per cent Government Stock 2011," an RBI statement said. The government will pay the bondholders a sum that will include the accrued interest on these bonds, RBI said. "The government stocks repurchased in this manner will get prematurely redeemed and interest will cease to accrue on such redeemed Government stocks," the statement said. The statement said these repurchases are adhoc in nature and up to Rs 20,000 crore. The move is aimed at the government''s cash management operations and the government will utilise its current surplus cash balances for the purpose. The liquidity came under pressure, after telcos had paid over Rs 67,000 crore for 3G spectrum. Another Rs 38,000 crore will go out of the system for broadband spectrum by next Tuesday. Besides, the corporates also paid advance tax to the government. As per the finance ministry sources, top 100 corporate has paid Rs 12,661.73 crore to the government as advance tax for the first quarter of this fiscal. As such, the goverment is in the surplus cash position, as spectrum sale fetched over Rs 70,000 crore than expected in the budget.

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