With reference to treasury bill yields and liquidity in India, consider the following statements: 1. The system liquidity surplus in October stood at ₹7.8 lakh crore. 2. The 91-day treasury bill yield reached 5.93% during the period. 3. The 10-year yield closed at 6.94% while the 2036 bond remained unchanged. Which of the statements given above is/are correct?

Treasury bill yields hit nearly two-year high as ₹35,000 crore liquidity surplus causes volatility

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 29 October 2026

Monetary policy and liquidity management: a key GS3 topic regarding yield curve volatility.

Why in news

Reserve Bank of India data revealed treasury bill yields hit a nearly two-year high due to a ₹35,000 crore liquidity surplus and high oil prices.

Background

Treasury bill yields reached 5.93% (91-day), 6.54% (182-day), and 6.69% (364-day), which are 20 basis points higher than the previous auction. The 10-year yield closed at 7.44% while the 6.94% 2036 bond remained unchanged.

Facts for Prelims

Fact91-day, 182-day, and 364-day treasury bill yields reached 5.93%, 6.54%, and 6.69% respectively.
FactSystem liquidity surplus in October stood at ₹2.6 lakh crore compared to ₹7.8 lakh crore in September.
FactThe 10-year yield closed at 7.44% while the 6.94% 2036 bond yield remained unchanged.
BodyReserve Bank of India (RBI) is the body responsible for monitoring and reporting treasury bill yields.

Prelims practice question

With reference to treasury bill yields and liquidity in India, consider the following statements:

The system liquidity surplus in October stood at ₹7.8 lakh crore.
The 91-day treasury bill yield reached 5.93% during the period.
The 10-year yield closed at 6.94% while the 2036 bond remained unchanged.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)3 only
(d)1, 2 and 3

Show answer

Answer: (b) 2 only — Statement 2 is correct. Statement 1 is incorrect: The liquidity surplus in October was ₹2.6 lakh crore. Statement 3 is incorrect: The 10-year yield closed at 7.44%.

For Mains

Q. Discuss how fluctuations in short-term liquidity and global commodity prices influence the yield curve and monetary policy transmission in India.

Dimensions to cover in your answer

Liquidity premium: Short-term funding pressures forcing traders to demand higher premiums in t-bills.
Inflation-Growth trade-off: High crude prices creating a dilemma between aggressive policy tightening and sustaining economic growth.
Fiscal-Monetary friction: Impact of widening fiscal deficits on market sentiment and rupee depreciation.

Keywords: Treasury bills · Liquidity surplus · Yield curve · Monetary policy · Inflationary pressure · Basis points

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