New Delhi [India], August 6 (ANI): The Government of India is set to conduct an underwriting auction for the sale (re-issue) of Government Securities for Rs 32,000 crore on Friday (August 7). According to the Reserve Bank of India (RBI), the entire notified amount for the new securities is subject to this underwriting process.

'The underwriting auction will be conducted through multiple price-based method on August 07, 2026 (Friday). PDs may submit their bids for ACU auction electronically through Reserve Bank of India Core Banking Solution (e-Kuber system),' the RBI said.

The securities include the re-issue of two securities - 6.36 per cent Government Security (GS) maturing in 2031 and 7.71 per cent GS maturing in 2066, carrying a notified amount of Rs 21,000 and 11,000 crores, respectively. These bonds will be sold through a competitive bidding process involving Primary Dealers (PDs).

In simple terms, an underwriting auction is conducted by the RBI to ensure that the full amount of government bonds being issued is subscribed, even if market demand is uncertain.

Primary Dealers act as underwriters in this process, they commit to purchasing any unsold portion of the bonds. This mechanism helps the government raise funds smoothly for its expenditure needs.

As per the RBI's underwriting commitment scheme, PD has a Minimum Underwriting Commitment (MUC) of Rs 500 crore for 6.36 per cent GS 2031 security and MUC of Rs 262 crore for 7.71 per cent GS 2066. They are also required to place bids for at least Rs 500 crore (6.36 per cent GS 2031) and Rs 262 crore (7.71 per cent GS 2066) for each security under the Additional Competitive Underwriting (ACU) auction.

The auction will follow a multiple price-based method and will be held through the RBI's E-Kuber system. The underwriting commission, or fee paid to PDs for their commitment, will be credited to their accounts on the day the securities are issued.

This auction is part of the government's regular borrowing program and highlights the RBI's role in facilitating smooth debt market operations. (ANI)