The Finance Ministry disclosed plans Monday to sell Rs 38,000 crore worth of government bonds utilizing the Reserve Bank of India’s newly implemented multiple price auction method.
Outlined in the announcement are three categories of bonds slated for sale:
- The “7.33 per cent Government Security 2026” will be offered for a total of Rs 6,000 crore through a price-based auction using the multiple price method.
- A “New Government Security 2034” will be up for grabs for Rs 20,000 crore via a yield-based auction, also using the multiple price method.
- Additionally, the “7.25 per cent Government Security 2063” will be available for purchase totaling Rs 12,000 crore, facilitated through a price-based auction using the multiple price method, according to the Finance Ministry statement.
The government reserves the right to retain additional subscriptions up to Rs 2,000 crore for each security. The auctions, to be conducted by the RBI’s Mumbai office, are scheduled for April 5 (Friday), the statement indicated.
Under the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities, up to 5 per cent of the notified amount of the securities sale will be allocated to eligible individuals and institutions.
Both competitive and non-competitive bids for the auction must be submitted electronically via RBI’s Core Banking Solution (E-Kuber) system on April 5. Non-competitive bids are accepted between 12:30 p.m. and 1 p.m., while competitive bids can be submitted between 12:30 p.m. and 1:30 p.m.
Results of the auctions will be declared the same day, with successful bidders expected to make payment by April 8.
As per the statement, the securities will qualify for ‘When Issued’ trading following guidelines outlined in the circular No. RBI/2018-19/25 dated July 24, 2018, and subsequent amendments, governing ‘When Issued transactions in Central Government Securities’.
In a concurrent move, the RBI announced Monday that following a review of market conditions and consultations with the Government of India, all securities under the government's market borrowing program will henceforth be auctioned using the multiple price method.
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