Bidding for the auction begins at 10:30 a.m. (0500 GMT) and the results are expected after 2:30 p.m. (0900 GMT). The bonds on sale are: 30 billion rupees of floating rate paper maturing in 2020, 60 billion rupees of 9.15 percent 2024 and 40 billion rupees of 8.30 percent 2040.

Tight cash conditions and heavy supplies of debt in coming weeks are expected to keep yields ranged with an upward bias, traders said.

Liquidity in the banking system has significantly tightened since the second week of November, with banks borrowing 1.13 trillion rupees ($21.7 billion) on Thursday, more than double of 495.25 billion borrowed on Nov. 4.

At 11:13 a.m. (0543 GMT), the yield on the new benchmark 10-year bond was up 2 basis points on the day at 8.81 percent, after easing to 8.78 percent at one stage.

Total volume on the central bank's electronic trading platform was low at 23.3 billion rupees, compared with the usual 35 billion to 40 billion rupees dealt in the first two hours of trade.

Krishnamurthy Harihar, treasurer at First Rand Bank, said yields would be boxed in a 8.80-8.90 percent range in the near term due to heavy supplies and expectations for more buybacks.

On Thursday, the central bank bought back 94.35 billion rupees of bonds, compared with a target of 100 billion. It had received offers worth a total of 273.92 billion rupees.

The benchmark five-year swap was steady at 7.31 percent, while the one-year rate was 1 basis point lower at 8.08 percent.