RBI opts for sharp liquidity drain through $10.5 billion debt sale

The Reserve Bank of India will sell bonds worth Rs 1 trillion (about $10.47 billion) in three tranches starting September 17 to drain excess liquidity from the banking system. Surplus liquidity averaged around Rs 10.25 trillion in September, pushing overnight rates below the monetary policy corridor floor. The move, the first such scheduled debt sale through auction since October 2014, could further raise government borrowing costs as the 10-year benchmark bond yield has already risen 26 basis points in the last four weeks amid surging oil prices and US Treasury yields.