KARACHI, Feb 14: The auction of treasury bills on Wednesday attracted massive response from the banks, but the State Bank kept the cut-off yields on three-, six- and 12-month papers unchanged.

The SBP accepted all the bids offered by the banks for buying T-bills. However, the amount raised by the SBP was in the tune of Rs48.4 billion which was more than three times of the target set for the auction.

A dealer said that the heavy investment in T-bills by banks could create a shortage of liquidity in the inter-bank market resulting in higher money rates, but he added that the scarcity would prevail for a short period.

The SBP raised Rs588 million for three-month, Rs2.538 billion for six-month and Rs45.292 billion for one year papers.

Analysts said the heavy investment in one year T-bills reflected that the interest rate would remain stable.