India’s Central Bank Fixes Underwriting Commissions for Long-Dated Government Bonds

The Reserve Bank of India (RBI) has set new underwriting commission rates for government bonds across varied maturities, signaling its continued focus on efficient debt management. These commissions, paid to primary dealers who underwrite bond issuances, are crucial in ensuring smooth auctions and investor confidence.

Key Highlights:

• 2055 Bonds: Commission fixed at ₹0.0084 per ₹100, reflecting higher costs for ultra-long-term securities.
• 2033 Bonds: Commission set at ₹0.0049 per ₹100, balancing medium-term borrowing needs.
• 2029 Bonds: Commission pegged at ₹0.0025 per ₹100, the lowest among the three, aligning with shorter maturity risk.
• Market Implication: Differentiated rates highlight RBI’s strategy to incentivize underwriting across maturities while keeping borrowing costs contained.
• Debt Management: These measures are part of India’s broader fiscal roadmap, ensuring liquidity and stability in the government securities market.
• Investor Confidence: By setting clear commission structures, RBI strengthens transparency and supports active participation from primary dealers.

This announcement underscores the RBI’s role in balancing fiscal discipline with market efficiency, ensuring India’s borrowing program remains credible and sustainable.

Sources: Reuters, RBI Updates