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RBI to auction government bonds worth Rs 34,000 crore


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On Monday, the Finance Ministry made an announcement regarding the auction of Government bonds totaling Rs 34,000 crore. The auction will be conducted by the Reserve Bank of India (RBI) on Friday, January 5.

What are Government Bonds?

Government bonds, also known as sovereign bonds or government securities, are debt securities issued by a government to raise capital. These bonds serve as a way for the government to borrow money from investors, and in return, the government pays periodic interest payments (coupon payments) to bondholders until the maturity date.

Government Bonds Auction

The auction will consist of three sets of Government securities. The first set, named “7.32 per cent Government Security 2030,” will have a notified amount of Rs 12,000 crore (nominal). This will be carried out through a price-based auction using the uniform price method, as stated by the Finance Ministry.

The second set will include “7.18 per cent Government Security 2037,” with a notified amount of Rs 10,000 crore (nominal). Similar to the first set, this will be conducted through a price-based auction using the uniform price method. The third set, “7.25 per cent Government Security 2063,” will have a notified amount of Rs 12,000 crore (nominal) and will be auctioned through a price-based auction using the multiple price method.

Additionally, the government reserves the option to retain additional subscriptions up to Rs 2,000 crore against each security.

As per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities, up to 5 per cent of the notified amount will be allotted to eligible individuals and institutions.

Bids for both competitive and non-competitive participation should be submitted in electronic format on the RBI Core Banking Solution (E-Kuber) system on January 5. Non-competitive bids must be submitted between 10:30 a.m. and 11:00 a.m., while competitive bids should be submitted between 10:30 a.m. and 11:30 a.m.

The auction results will be announced on January 5, and successful bidders are expected to make payments on January 8.

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