MUMBAI: The Reserve Bank of India could consider selling government bonds for the first time in four years to minimise the impact of heavy inflow of US dollars that have been pouring in on expectations of a stable regime following the ongoing general elections and could come in with greater intensity after the government is formed.
The RBI on Monday set a limit of 50,000 crore for sale of government securities in 2014-15 under the Market Stabilisation Scheme (MSS), which was introduced in 2004 to facilitate absorption of excess rupee liquidity in the system. "Right now, it is not needed to issue such (market stabilisation) bonds as the situation does not warrant so," said Anindya Das Gupta, managing director of Barclays Bank. "Expectation on OMOs (open market operations for liquidity infusion) and MSS bonds cannot go in tandem. However, for the rest of 2014-15, if required, the RBI can do it depending on the degree of FII inflows."
MSS bonds are special govern...
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