RBI to auction G-secs worth Rs 30,000 cr next Friday

The government has announced to sell dated securities worth Rs 30,000 crore on May 29, the Reserve Bank of India (RBI) said in a statement on Friday. The auction is part of government's market borrowing program.

Earlier this month, the government had decided to modify the indicative calendar for issuance of government dated securities for the remaining part of the first half of fiscal 2020-21 (May 11-September 30, 2020) after reviewing its cash position and requirements. The estimated gross market borrowing in the financial year 2020-21 will be Rs 12 lakh crore in place of Rs 7.80 lakh crore as per Budget Estimate (2020-21). The revision in borrowings was necessitated on account of the COVID-19 pandemic.

As per the RBI, the securities being offered for auction on May 29 are: 6.18 per cent GS 2024 (Rs 12,000 crore), New GS 2034 (Rs 11,000 crore) and 7.16 per cent GS 2050 (Rs 7,000 crore). The notified amount for the three securities total Rs 30,000 crore. The Government of India will have the "option to retain additional subscription up to Rs 2,000 crore" each against any one or more of the securities, it added. The RBI said the auction will be yield based for new security and price based for other securities, using multiple price methods. Up to 5 per cent of the notified amount of the sale of the stocks 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 RBI Core Banking Solution (E-Kuber) system on May 29, 2020, the central bank added.