Domestic news agency NewsWire 18, quoted a government source as saying, that New Delhi is relooking at its borrowing needs after advance tax collection for the December quarter was "way below" expectations.
The benchmark five-year swap rate ended at 7.01 percent, up 6 basis points on the day, after touching a high of 7.03 percent, its highest since Dec. 16.
The one-year rate closed 4 basis points higher at 7.77 percent, after hitting 7.78 percent, a level last seen on Dec. 16.
Total volume in the swaps market stood at 36.81 billion rupees ($698 million), Clearing Corp of India data showed.
"The report that the government is re-considering borrowing plans has pushed the rates higher," a dealer with a foreign bank said.
Traders will now await any announcement from the government on additional borrowing, and keenly watch out for details, including the amount of extra money it could raise.
Liquidity in the banking system remained tight with lenders borrowing 1.429 trillion rupees from the RBI's repo window, lower than 1.733 trillion drawn on Friday, but significantly higher than the Reserve Bank of India's comfort zone of 600 billion rupees deficit.
Traders said cash availability with banks could rise this week when the government pays salaries to its employees.
Spending by the government will further improve in January before the fiscal year ends in March and should help boost liquidity conditions, traders said.
The benchmark 10-year bond yield ended at 8.49 percent, 12 basis points higher than its previous close.