Government of India Announces Sale of Government Securities for ₹34,000 Crore

The Government of India has announced the sale (re-issue) of three government securities worth a total of ₹34,000 crore through a price-based auction. The sale will be conducted on September 27, 2024 by the Reserve Bank of India (RBI). Here’s everything you need to know about this important financial event.

Details of the Government Securities

The Government will be re-issuing the following three securities:

1. 7.04% Government Security 2029 for ₹12,000 crore.
2. 7.23% Government Security 2039 for ₹12,000 crore.
3. 7.09% Government Security 2054 for ₹10,000 crore.

Each security will be sold using the multiple price auction method. This means that the price of each security may vary based on the bids submitted.

Option for Additional Subscription

The government has an option to retain an additional ₹2,000 crore against each of the three securities. This gives them the flexibility to increase the total amount raised if needed, potentially bringing the total sale to ₹40,000 crore.

Bidding Process

The auction will be conducted via the RBI’s E-Kuber system, which is the central banking solution for auctioning government securities. Bids will be accepted in two formats:

• Non-Competitive Bids: These can be submitted between 10:30 a.m. and 11:00 a.m.
• Competitive Bids: These can be submitted between 10:30 a.m. and 11:30 a.m.

Non-competitive bidders, including individual investors, will be allotted up to 5% of the total sale amount, making it easier for small investors to participate.

Announcement of Results

The results of the auction will be announced on September 27, 2024 (Friday), and the payment by successful bidders must be made by September 30, 2024 (Monday).

“When Issued” Trading

The securities will also be eligible for “When Issued” trading, which means that they can be bought and sold before they are officially issued. This is in accordance with guidelines set by the RBI to improve liquidity in the government securities market.

Conclusion

This auction provides an opportunity for both large institutions and individual investors to invest in government securities, which are considered a safe and stable investment. With the option to retain additional subscription, the Government of India aims to manage its financial needs efficiently while providing opportunities for market participation.