The Reserve Bank of India has announced the auction for the sale of Government Securities worth Rs 32,000 crore. The auction is scheduled to take place on Friday and it aims to facilitate the sale (re-issue) of Government Securities through a multiple price-based method.
The primary dealers can submit their bids electronically through the E-Kuber System between 09:00 A.M. and 09.30 A.M on Friday.
"Underwriting Auction for sale of Government Securities for Rs32,000 crore on April 26, 2024 Government of India has announced the sale (re-issue) of Government Securities, as detailed below, through auctions to be held on April 26, 2024" said a realease by the RBI.
According to RBI the Under the primary dealers are required to fulfill Minimum Underwriting Commitment (MUC) and minimum bidding commitment under Additional Competitive Underwriting (ACU) for the auction.
The underwriting commission will be credited to the current account of the respective primary dealers with the Reserve Bank of India (RBI) on the day of the issue of securities. This auction presents an opportunity for primary dealers to participate in the underwriting process and contribute to the government's financing activities.
The auction signifies the government's continued efforts to manage its borrowing program efficiently and meet its funding requirements. With the auction scheduled for April 26, RBI urges primary dealers to prepare and participate actively to support the smooth conduct of the auction and ensure successful outcomes for all stakeholders.
A Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments. It acknowledges the Government's debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more).
In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs). G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.
