The central bank received 42 applications for Rs 1,191.91 crore at the sale of the government stock maturing in 2013. On Monday, the centre had announced the sale of a 15-year `on-tap' issue offering 12.40 per cent.

Dealers said that the issue was mainly subscribed by insurance companies like the Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC), provident funds and a few nationalised banks. "For them, it was a very attractive buy," an analyst with a leading brokerage house said.

This is the fourth on-tap stock to be issued this fiscal. The Reserve Bank has mopped up Rs 7,929.03 crore through three tap stocks of three-, six- and ten-year maturity in June and July this year.

The 15-year on-tap bond is the longest maturity paper floated this fiscal. Earlier, on July 1, the RBI had floated a 12-year paper offering 12.25 per cent. It mopped up Rs 1,000 crore through the paper.

Money-market sources say currently there are a few 15-year instruments in the secondary market. These instruments, however, are not traded as there is no demand for instruments maturing beyond 12 years.

Fund managers feel that by issuing a 15-year `on-tap' bonds, the centre wants to tap insurance and provident funds.

The 15-year tap stock will be issued for a minimum amount of Rs 10,000 face value and in multiples of Rs 10,000. The interest on government stock will be paid half-yearly, and repaid at par on August 20, 2013. The government stock will be eligible for ready-forward facility.

The announcement of the 15-year on-tap issue took the market by surprise. "We were not expecting an on-tap issue so soon after the Rs 3,000-crore five-year paper auction held last week," said market sources.

I-Sec's managing director Kishor Chaukar said: "Although the market is surprised by the long-term instrument, the yield offered by the central bank is reasonable and the market will respond positively."

The RBI auctioned a five-year 2003 government stock last week, which sailed through smoothly without any devolvement on the central bank or primary dealers. It received 167 applications worth Rs 5,567.16 crore for a notified amount of Rs 3,000 crore at a high coupon rate of 11.78 per cent. The RBI accepted 73 bids worth Rs 3,000, of which 23 were partially alloted.