The country's failure thus far to join China in global debt indexes is adding to investor concerns about meager inflation-adjusted yields and a widening fiscal deficit.
The bond has received 21 bids and has been oversubscribed by 4.5 times
Policymakers have been talking about opening up the country's financial sector and internationalising the use of the rupee for more than a decade, with little progress.
World Bank officials on Friday warned that developing economies could suffer close to a 3 per cent decline in economic output if consumption and investment do not rebound quickly after the coronavirus pandemic.
The government on Tuesday said it will sell Rs 4.88 lakh crore ($64.5 billion) of bonds in the six months to September. While the number is less than what the market expected, the auctions may get fewer bids as the crackdown to stop the spread of the coronavirus forces traders and bankers to stay indoors.
The RBI has pledged its readiness to take necessary action to ensure financial system stability, but for now it has refrained from cutting interest rates. Prime Minister Narendra Modi has announced setting up of a task force under Finance Minister Nirmala Sitharaman to help businesses already facing strain due to the pandemic.
"Certain specified categories of government securities would be opened fully for non-resident investors, apart from being available to domestic investors," Finance Minister Nirmala Sitharaman had announced in the Budget.
Finance Minister Nirmala Sitharaman outlined a multi-billion dollar package for farm and infrastructure spending in the budget for 2020-21, but the stimulus fell short of market expectations and stocks slumped during a special trading session on Saturday.
The RBI said it had decided to conduct the special OMO after reviewing the liquidity and market situation and assessing financial conditions.