Synopsis: RBI announced the sale of government securities by re-issuing two existing bonds of ₹32,000 crore on Friday, July 10. These auctions will also open up an avenue for retail investors to purchase through the RBI Retail Direct portal, with payment due on July 13.
The Reserve Bank of India (RBI) has announced an auction for the sale of government bonds of ₹32,000 crore which is scheduled for July 10. It will involve sale of two previously issued bonds and is expected to use multiple price auction, the standard process of RBI, and participation is permitted from both retail and institutional participants.
What’s Being Auctioned
- Total auction size: ₹32,000 crore, split across two re-issued bonds
- 6.36% GS 2031– ₹21,000 crore, maturing February 16, 2031
- 7.71% GS 2066– ₹11,000 crore, maturing May 18, 2066
- Greenshoe option: government can retain up to ₹2,000 crore extra per bond if demand exceeds the notified amount
How the Auction Will Be Conducted
The Mumbai office of the RBI will run the sale using the multiple price method, meaning successful bidders pay the price they actually quoted rather than a single uniform cut-off price. All bids, whether competitive or non-competitive, must be submitted electronically through the RBI’s e-Kuber platform rather than any physical process.
Room for Retail Investors
- 5% of the notified amount per bond is reserved for non-competitive bidding, meant for individuals and smaller institutions
- Minimum bid size: ₹10,000, in multiples of ₹10,000 thereafter
- Bids can be placed directly through the RBI Retail Direct portal
- Allotment happens at the weighted average yield or price from the competitive segment, so retail bidders don’t need to predict market pricing themselves
Other Details Worth Knowing
The two securities will be open for “When Issued” trading from July 7 through July 10, allowing market participants to trade the bonds before the actual settlement date. Both bonds will also qualify for repo transactions under existing RBI norms once issued. Interest payouts on these securities are typically made half-yearly, with the exact schedule specified in the individual notification for each bond. Also any participation by non-resident investors will be governed by the Fully Accessible Route framework. As with every auction of this kind, the central bank has reserved the right to accept or reject bids, in full or in part, without providing a reason.
