The government will auction bonds worth ₹32,000 crore through the RBI on September 26. This will include two long-term securities, with an option for an additional subscription of ₹4,000 crore.
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GOVT Bond: The Finance Ministry has announced that it will raise ₹32,000 crore from the sale of two long-term government securities through an auction conducted by the Reserve Bank of India (RBI) in Mumbai on September 26. The first lot, “6.68 percent Government Securities 2040,” is worth ₹16,000 crore, while the second, “6.90 percent Government Securities 2065,” is worth ₹16,000 crore. Both will be sold through a price-based auction using the multiple-price method. The government may also seek additional subscriptions of up to ₹2,000 crore for each bond, taking the total potential raise to ₹36,000 crore.
Auction Process and Debt
As per RBI guidelines, up to 5 percent of the notified amount will be reserved for eligible retail and institutional investors under the non-competitive bidding facility. The bidding process will be conducted through the RBI’s e-Kuber platform. Non-competitive bids can be submitted from 10:30 am to 11:00 am, while competitive bids will be accepted until 11:30 am. Results will be announced on the same day, and successful bidders must make payment by Monday, September 29th.
What are the benefits of investing in bonds?
In fact, whether the central government or any company, they raise funds for their expenses by auctioning bonds. When the government auctions bonds, the funds raised are used to meet infrastructure and other financial needs. Now, the question on your mind is why people buy bonds and what are their benefits? Let us explain:
In fact, the government pays regular interest to those who purchase government bonds. Since they are government-owned, they are a good way to invest money. If you have a significant amount of capital, you can secure it by purchasing bonds. One advantage is that they generate regular income and reduce portfolio risk.
Why do people buy government bonds?
1. Because government bonds belong to the central government, the risk of losing money is lower.
2. They provide regular income. The government pays interest on bonds at regular intervals, providing stable income.
3. If someone believes in conservative investing, this is a good way to preserve their capital.
4. They diversify the portfolio and reduce risk.
5. When interest rates fall, bond prices can rise, resulting in capital appreciation for investors.
6. Investors can sell these bonds whenever they wish. This means that when investors need money, they can sell them and meet their needs.
7. In the long term, these bonds can provide better returns than fixed deposits (FDs).
