Mumbai (Maharashtra) [India], July 4 : The Reserve Bank of India (RBI) has announced an underwriting auction for the sale of government securities worth Rs 32,000 crore on Friday.
The auction will cover both issue of new government security and the re-issue of an existing one.
"The underwriting auction will be conducted through multiple price-based method on July 04, 2025 (Friday). PDs may submit their bids for ACU auction electronically through Core Banking Solution (E-Kuber) System," the RBI said.
The securities include a new Government Security (GS) maturing in 2040 and a re-issue of the 6.90 per cent GS maturing in 2065, each carrying a notified amount of Rs 16,000 crore. These bonds will be sold through a competitive bidding process involving Primary Dealers (PDs).
In simple terms, an underwriting auction is conducted by the RBI to ensure that the full amount of government bonds being issued is subscribed, even if market demand is uncertain.
Primary Dealers act as underwriters in this process, they commit to purchasing any unsold portion of the bonds. This mechanism helps the government raise funds smoothly for its expenditure needs.
As per the RBI's underwriting commitment scheme, each PD has a Minimum Underwriting Commitment (MUC) of Rs 381 crore for each of the two securities. They are also required to place bids for at least Rs 381 crore under the Additional Competitive Underwriting (ACU) auction.
The auction will follow a multiple price-based method and will be held through the RBI's E-Kuber system. The underwriting commission, or fee paid to PDs for their commitment, will be credited to their accounts on the day the securities are issued.
This auction is part of the government's regular borrowing program and highlights the RBI's role in facilitating smooth debt market operations.
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