Reserve Bank Of India Announces Underwriting Auction For Government Securities

Category RBI News Updates
Published 18 May 2023

The Reserve Bank of India (RBI) has recently made an important announcement regarding the sale of Government Securities. The auction, scheduled for May 19, 2023, aims to raise ₹33,000 crore through the issuance of these securities. The underwriting auction will be conducted using a multiple price-based methods, providing an opportunity for Primary Dealers (PDs) to participate and secure underwriting commitments. This move by the Indian government is part of its ongoing efforts to manage the country's financial markets effectively. Let's delve into the details of this upcoming underwriting auction.

Underwriting Auction Details:

The Government of India has outlined the following minimum underwriting commitments (MUC) and minimum bidding commitments per PD under Additional Competitive Underwriting (ACU) for the underwriting auction:

| Security         | Notified Amount (₹ crore) | MUC amount per PD (₹ crore) | Minimum bidding commitment per PD under ACU auction (₹ crore) |
|------------------|---------------------------|-----------------------------|--------------------------------------------------------------|
| 7.06% GS 2028    | 8,000                     | 191                         | 191                                                          |
| 7.26% GS 2033    | 14,000                    | 334                         | 334                                                          |
| 7.36% GS 2052    | 11,000                    | 262                         | 262                                                          |

These commitments are in accordance with the extant scheme of underwriting, as notified on November 14, 2007.

Participation and Bidding Process:

Primary Dealers (PDs) have the opportunity to submit their bids for the ACU auction electronically through the Core Banking Solution (E-Kuber) System. Bids can be submitted between 09.00 A.M. and 09.30 A.M. on the day of the underwriting auction, May 19, 2023.

Underwriting Commission:

Upon successful underwriting of the Government Securities, the underwriting commission will be credited to the current accounts of the respective PDs with the Reserve Bank of India (RBI) on the day of the securities issuance.

Conclusion:

The upcoming underwriting auction for Government Securities by the Reserve Bank of India provides an opportunity for Primary Dealers to secure underwriting commitments. The auction, scheduled for May 19, 2023, aims to raise ₹33,000 crore for the Government of India. By engaging in these auctions, the government seeks to efficiently manage the country's financial markets and meet its funding requirements.

References:

  1. Reserve Bank of India - Press Releases. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx
  1. Government of India. Retrieved from [https://www.india.gov.in/]
  2. November 14, 2007, Underwriting Scheme Notification. Retrieved from [https://www.rbi.org.in/]
  3. Core Banking Solution (E-Kuber) System. Retrieved from [https://www.rbi.org.in/]
  4. Reserve Bank of India. Retrieved from [https://www.rbi.org.in/]