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RBI Proposes Framework for Acceptable Bids at Auctions to Underwriters

  • Primary dealers asked to respond by July 10 to RBI proposal
  • Letter calls on dealers to play their part in price discovery
India Central Bank Lauds Government Effort to Rein in Budget Gap
Photographer: T. Narayan/Bloomberg
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India’s central bank wrote to primary dealers proposing a framework for defining acceptable bids at auctions, as underwriters are having to step in to rescue more bond sales.

The Reserve Bank of India wants to define any bids that have a spread of more than two basis points from secondary market yields as outliers, according to people with knowledge of the matter, who asked not to be identified as the discussions are private.