Mumbai: The government has approved the issue of the first tranche of oil bonds worth Rs14,150 crore out of total of Rs28,300 crore to state-owned oil marketing companies. Finance minister P Chidambaram said the oil bonds, meant to compensate them for the losses on retail sales of petrol and diesel, will be issued within this month.

Chidambaram, however, ruled out statutory liquidity ratio (SLR) status for oil bonds. This means that banks will not be able to subscribe to the bonds as part of their SLR requirements - banks are allowed to invest 25 per cent of their liabilities in approved securities among other things.

The finance minister had last month said that the bonds would not qualify as bonds.

"The oil bonds will be issued within this month and they will not get SLR status," Chidambaram told reporters.

The government has not yet concluded its borrowing programme for the year and allowing banks to invest in oil bonds would only help to discourage them from buying government securities.

Last year, the oil companies were issued bonds worth Rs11,500 crore of three, six and nine year maturities with coupon rates of 7.33 per cent, 7.47 per cent and 7.61 per cent, respectively.