Investors' confidence in government securities remains intact, RBI successfully sold bonds worth Rs 36000 crore

Reserve Bank of India auctioned government securities for Rs 36,000 crore successfully. RBI had set the notified value of Rs 6,000 crore for the 2028 maturity security at 5.91 percent and Rs 30,000 crore for the 2035 maturity security at 6.33 percent. Both auctions were subscribed in full. This reflects investors' high demand for government bonds.

According to the data, competitive bid proposals worth a total of Rs 24,453 crore were received from 98 participants for 5.91 percent GS 2028. At the same time, bids worth Rs 74,694 crore were received through 402 bids for 6.33 percent GS 2035. After evaluation, RBI accepted competitive bids of Rs 5,998.13 crore for 2028 bonds and Rs 29,947.86 crore for 2035 bonds. Non-competitive bids were also fully accepted. Their amount was Rs 1.86 crore and Rs 52.13 crore respectively.

In competitive bids, firms, banks, and other institutions invest in securities by bidding for a fixed return. In this, the lowest bidders get the allocation. But retail investors and smaller institutional investors take part in non-competitive bids and they don't provide the desired return.

The auction of both the securities received full underwriting support from primary dealers. The entire notified amount of Rs 6,000 crore for the 2028 bonds and Rs 30,000 crore for the 2035 bonds was underwritten and accepted. This indicates that investors are willing to invest in government bonds despite low returns, indicating deep confidence in these securities.

Meanwhile, the next meeting of the Monetary Policy Committee of the Reserve Bank of India is scheduled to be held between August 5 and August 7, 2025. The market will closely monitor the outcome of the meeting for any change in the interest rate stance or inflation expectations.