The Government of India (GoI) has announced the sale (re-issue) of government securities through an auction. The total amount of these securities is ₹33,000 crore. This auction will happen on October 18, 2024 (Friday). The Reserve Bank of India (RBI) will conduct the auction at its office in Mumbai.
What Are Government Securities?
Government securities are bonds or financial instruments issued by the government to raise money. These securities come with fixed interest rates, and the government pays back the money to investors after a set time period. In this case, there are three government securities being re-issued. Each one has a different maturity period, meaning the time when the government will repay the investors.
Details of the Securities for Sale
The government will sell three types of securities:
- 7.02% Government Security 2031 – ₹10,000 crore
- 7.23% Government Security 2039 – ₹13,000 crore
- 7.09% Government Security 2054 – ₹10,000 crore
These securities are being sold through a price-based auction using the multiple price method. This means that the buyers who bid the highest prices will win the auction. The government has also given itself the option to take additional money, up to ₹2,000 crore for each security. This will happen if the demand is high.
Who Can Participate in the Auction?
Both individuals and institutions can participate in this auction. Up to 5% of the total amount will be reserved for eligible individuals and institutions under a special Non-Competitive Bidding Facility. This allows smaller investors to participate without directly competing with big institutions in the auction.
How to Bid in the Auction?
Participants in the auction must submit their bids in electronic format using the RBI’s Core Banking Solution (E-Kuber) system. The timing for submitting bids is different for competitive and non-competitive bidders.
- Non-Competitive Bids: Must be submitted between 10:30 a.m. and 11:00 a.m. on October 18, 2024.
- Competitive Bids: Must be submitted between 10:30 a.m. and 11:30 a.m. on October 18, 2024.
Announcement of Results and Payment
The results of the auction will be announced later on the same day, October 18, 2024. Successful bidders will be required to make the payment by October 21, 2024 (Monday). This payment is necessary to secure the purchase of the government securities they have successfully bid on.
Eligibility for “When Issued” Trading
The government securities will be eligible for “When Issued” trading. This means that investors can buy or sell the securities even before they are officially issued. The guidelines for such trading have been set by the RBI in a circular issued on July 24, 2018, and amended from time to time.
Conclusion
The sale of government securities is a way for the Government of India to raise funds for its projects. Investors have the opportunity to purchase these securities and earn interest until the government repays them at the end of the bond’s maturity period. With ₹33,000 crore up for grabs, this auction offers both institutions and individuals a chance to invest in a stable and secure government-backed financial product.
Observer Voice is the one stop site for National, International news, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
