The notified amount of the 182-day T-bills is expected to be Rs 300 crore and the instrument will be auctioned twice a month on alternate Wednesdays. The 364-day T-bills auction will take place on other two Wednesdays as has been the practice. In effect, on all the four Wedendays a month the RBI will auction 364-day and 182-day T-bills alternately.

Formar RBI deputy governor SS Tarapore is not in favour of the introduction of 182-day T-bills as he thinks that it will hamper the 364-day T-bills market. However, the RBI is of the view that the introduction of 182-day T-bills is necessary as it will help creating a proper yield curve.

"Themoney market participants will have a better idea of the liquidity position in the market," said an official from a primary dealership outfit.

Market sources are of the view that the introduction of a new instrument will expand the T-bills market and will help in deepening this segment.

At present, there are three treasury bill instruments in the market: short-term 14-day T-bills, medium-term 91-day T-bills and 364-day T-bills. For the 14-day and 91-day the notified amount is fixed at Rs 100 crore whereas for the 364-day T-bills, the notified amount is currently pegged at Rs 500 crore, down from Rs 750 crore.

The 364-day T-bills auction is a part of the centre's market borrowing progromme unlike the new 182-day T-bills.

Though reintroduction of 182-day T-bills on a fortnightly basis was proposed in the first half of the 1998-99 credit policy it was not introduced. The April 1999 credit policy announced the reintroduction of 182-day T-bills.

While the date of issuance of the bills is known to themarket in advance, the information regarding the notified amount is announced prior to each auction. According to market sources, a constant notified amount in T-bills segment would be helpful in evolving a meaningful benchmark for pricing of money market instruments.

Currently the state governments are permitted to invest their surplus funds in 14 and 91 day T-bills as non-competitive bidders. In a bid to give filip to the T-bills market and provide the state government more flexibility in their investments of surplus funds, the central bank has decided to permit state governments to put bids on non-competitive basis in the auction for 182-day and 364-day T-bills.