New Delhi: The Finance Ministry on Monday announced the sale of government bonds worth Rs 32,000 crore in two lots through auctions to be conducted by the Reserve Bank of India (RBI) in Mumbai on Friday. The first lot comprises “6.68 per cent Government Security 2040” for a notified amount of Rs 16,000 crore, while the second lot consists of “6.90 per cent Government Security 2065” also for a notified amount of Rs 16,000 crore.
Both lots will be sold through a price-based auction using a multiple price method, the official statement said. The government will have the option to retain an additional subscription up to Rs 2,000 crore against each security mentioned above.
Up to 5 per cent of the notified amount of the sale of the securities will be allotted to eligible individuals and institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities. Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber system) on September 26.
The non-competitive bids should be submitted between 10.30 a.m. and 11 a.m., and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. The result of the auctions will be announced on September 26, and payment by successful bidders will be on September 29.. The Securities will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018, as amended from time to time.
A government bond represents debt issued by a government and sold to investors to support spending. Government bonds are considered low-risk investments since the government backs them. However, because of their relatively low risk, these bonds typically pay low interest rates.
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