On Monday, the Finance Ministry revealed plans for the sale of government bonds valued at Rs 38,000 crore through the Reserve Bank of India’s innovative multiple price auction mechanism.
These bonds comprise three categories: firstly, the "7.33 per cent Government Security 2026" will be offered for a set amount of Rs 6,000 crore via a price-based auction employing the multiple price method. Secondly, the "New Government Security 2034" will be available for Rs 20,000 crore through a yield-based auction also utilizing the multiple price method. Thirdly, the "7.25 per cent Government Security 2063" will be up for sale for Rs 12,000 crore via a price-based auction employing the multiple price method, as stated by the Finance Ministry in an official statement.
Additionally, the government retains the option to accept extra subscriptions up to Rs 2,000 crore for each security. The auctions are slated to be conducted at the RBI’s Mumbai office on April 5 (Friday).
Under the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities, up to 5 per cent of the notified amount of securities sale will be allocated to eligible individuals and institutions.
Both competitive and non-competitive bids for the auction are required to be submitted electronically via RBI’s Core Banking Solution (E-Kuber) system on April 5. Non-competitive bids must be submitted between 12:30 p.m. and 1 p.m., while competitive bids should be submitted between 12:30 p.m. and 1:30 p.m.
Results of the auctions will be declared on the same day, with successful bidders expected to make payments by April 8.
Furthermore, the securities will be eligible for ‘When Issued’ trading, adhering to the guidelines outlined in the RBI circular No. RBI/2018-19/25 dated July 24, 2018, and subsequent amendments.
In a concurrent announcement, the RBI disclosed that after reviewing market conditions and consulting with the Government of India, it has decided that all securities under the government's market borrowing programme will henceforth be auctioned using the multiple price method.
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