The auction, the first since March 2025 to see a clean rejection, comprised 77 bids for 91‑day, 68 for 182‑day, and 79 for 364‑day T‑bills, totaling Rs 23,000 crore in intended borrowing.
Bond market analysts pointed to the government's hefty cash balance—about Rs 5.3 lakh crore—as the key factor allowing the RBI to refuse bids without tightening liquidity.
In its statement, the RBI framed the move within a 'calibrated tightening' narrative, warning that granting higher rates could be interpreted as a shift in short‑term policy.
The government, meanwhile, remains content with its surplus and has not signaled an urgent need for funds. The next T‑bill auction is scheduled for April 5, 2024, where market participants will test the central bank's resolve.
A bond dealer noted that the rejection could deter future bids unless rates rise substantially, potentially reshaping the demand curve for government debt.