RBI's Strategic Switch: Shaping the Future of Indian Government Securities

The Reserve Bank of India is set to conduct a switch auction for Rs 25,000 crore in government securities. This initiative aims to manage debt maturity profiles by exchanging near-term maturing bonds for long-term securities, easing future repayment obligations for the fiscal year 2027.

The Reserve Bank of India (RBI) is poised to conduct a switch auction involving Rs 25,000 crore of government securities on March 2, as announced on Wednesday. The auction will run from 10:30 AM to 11:30 AM, with results slated for release the same day. Settlement takes place on March 4, according to the RBI's press release.

This marks the third switch auction by the RBI this month, a strategic move to alleviate looming redemption pressure in FY27, when bonds valued at Rs 5.47 lakh crore are scheduled to mature. Through a switch auction, the government trades near-term maturing bonds for long-term securities, as highlighted by RBI data. All securities maturing in FY27 are being exchanged for those maturing after FY32.

With gross market borrowing already planned at Rs 17.2 lakh crore, this move aims to streamline the maturity profile and better handle repayment obligations. Earlier switch auctions saw the RBI purchasing back securities worth Rs 84,804 crore, further underscoring its proactive approach in managing the country's fiscal landscape.

(With inputs from agencies.)