RBI to host underwriting auction for Rs 28,000 crore government securities
New Delhi, May 27
The Reserve Bank of India will conduct an underwriting auction for the sale and re-issue of Government Securities worth Rs 28,000 crore on May 29.
"Government of India has announced the sale (re-issue) of Government Securities, as detailed below, through auction to be held on May 29, 2026 (Friday)," the RBI stated in a press release.
As per the extant scheme of underwriting commitment notified on November 14, 2007, the amounts of Minimum Underwriting Commitment (MUC) and the minimum bidding commitment under Additional Competitive Underwriting (ACU) auction, applicable to each Primary Dealer (PD), on offer include 6.68 per cent GS 2040 with a notified amount of Rs 17,000 crore.
For this specific security, the MUC per primary dealer stands at Rs 405 crore, and the minimum bidding commitment per primary dealer under the ACU auction stands at Rs 405 crore.
The second security scheduled for the auction is 7.43 per cent GS 2076, which carries a notified amount of Rs 11,000 crore. The Reserve Bank of India fixed the MUC per primary dealer at Rs 262 crore, while the minimum bidding commitment per primary dealer under the ACU auction stands at Rs 262 crore.
"The underwriting auction will be conducted through multiple price-based method on May 29, 2026 (Friday). PDs may submit their bids for ACU auction electronically through Reserve Bank of India Core Banking Solution (e-Kuber system) between 09:00 A.M. and 09:30 A.M. on the day of underwriting auction," the RBI press release added.
The central bank also clarified the settlement process for the participating primary dealers regarding their financial compensation for the event stating: "The underwriting commission will be credited to the current account of the respective PDs with RBI on the day of issue of securities."
Underwriting of government securities is a critical function performed by primary dealers to ensure smooth borrowing operations by the government. In this system, primary dealers commit to subscribing to unsold portions of government bond issuances, thereby assuring full subscription.
The ACU mechanism allows the government to allocate additional underwriting amounts through a competitive bidding process, where the commission rate is determined based on market demand.
The RBI's announcement comes as part of its routine government securities issuance calendar, which is a key instrument for managing the fiscal requirements of the government and influencing liquidity in the financial system.
Primary dealers, a select set of financial institutions authorised by the RBI, play an essential role in underwriting and distributing these securities in the secondary market.
— ANI
Reader Comments
The 6.68% GS 2040 with Rs 17,000 crore notified amount is interesting. Long term bonds are crucial for infrastructure financing. But I wish the RBI would consider retail investors more in these auctions. Instead of only primary dealers, why not open it up for common people? 🤔
Standard procedure, but the numbers are substantial. The 7.43% GS 2076 with Rs 11,000 crore shows the government's long-term commitment to fiscal management. The e-Kuber system for bidding is efficient, but I hope the auction rates are favorable for the economy.
As an economics student, this is fascinating! The underwriting mechanism ensures our borrowing program never fails. Rs 405 crore MUC per PD for the 2040 bond seems reasonable. But we should also focus on reducing fiscal deficit rather than just managing it efficiently. Just my two paise! 💰
People don't realize how important primary dealers are. They're the backbone of our debt market. Without them, government borrowing would be chaotic. This auction is routine but critical. Still, I'd love to see more transparency about where this Rs 28,000 crore is being spent.
Multiple price-based method for underwriting auction is good for market discovery. The 9:00-9:30 AM bidding window is tight but professionals manage. India's bond market is maturing well. Let's hope the yields remain attractive for foreign investors too.
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