RBI Announces auction sale of Government securities worth Rs 32,000 crore

The Reserve Bank of India (RBI) has declared an auction for the sale of Government Securities amounting to Rs 32,000 crore. Scheduled for Friday, this auction aims to facilitate the sale (re-issue) of Government Securities through a multiple price-based method.

Primary dealers can electronically submit their bids via the E-Kuber System between 09:00 A.M. and 09:30 A.M. on Friday.

"Underwriting Auction for Sale of Government Securities for Rs 32,000 Crore on April 26, 2024: The Government of India has announced the sale (re-issue) of Government Securities, as detailed below, through auctions to be held on April 26, 2024," stated a release by the RBI.

According to the RBI, primary dealers must fulfill the Minimum Underwriting Commitment (MUC) and minimum bidding commitment under Additional Competitive Underwriting (ACU) for the auction.

The underwriting commission will be credited to the current account of the respective primary dealers with the Reserve Bank of India (RBI) on the day of the issue of securities. This auction presents an opportunity for primary dealers to participate in the underwriting process and contribute to the government's financing activities.

The auction underscores the government's sustained efforts to manage its borrowing program efficiently and meet its funding requirements. With the auction slated for April 26, the RBI urges primary dealers to prepare and actively participate to support the smooth conduct of the auction, ensuring successful outcomes for all stakeholders.

Understanding Government securities (G-Secs)

A Government Security (G-Sec) is a tradable instrument issued by the Central Government or the State Governments, acknowledging the Government's debt obligation. These securities can be short-term (usually termed treasury bills, with original maturities of less than one year) or long-term (usually termed Government bonds or dated securities with an original maturity of one year or more).

In India, the Central Government issues both treasury bills and bonds or dated securities, while State Governments issue only bonds or dated securities, known as State Development Loans (SDLs). G-Secs are considered practically risk-free gilt-edged instruments, carrying no risk of default.