Liquidity Surge Ahead: RBI’s ₹36,000 Crore Bond Sale Draws Market Buzz

Image Source: Business Standard

The Reserve Bank of India (RBI) has set an exceptionally low underwriting commission of ₹0.0007 per ₹100 for the upcoming 2035 government bond auction, reflecting robust demand and high market confidence in sovereign debt. This commission rate, announced ahead of the ₹30,000 crore re-issue of the 2035-dated security, signals the central bank’s confidence in smooth debt absorption as it continues to inject liquidity into the financial system.

Key Highlights:

Auction Details: The RBI will conduct the auction for two dated government securities on May 30, 2025, including a ₹30,000 crore re-issue of the 2035 bond. The auction uses a multiple price method, allowing a broad range of market participants to submit both competitive and non-competitive bids electronically via the RBI’s e-Kuber platform. Results will be declared the same day, with payments due by June 2.
Underwriting Commission: Primary Dealers can bid for the Additional Competitive Underwriting (ACU) portion, with the commission fixed at just ₹0.0007 per ₹100—one of the lowest in recent memory. This ultra-low rate underlines the strong appetite for government securities and the expectation of a successful auction with minimal risk for underwriters.
Market Context: The auction comes as part of the RBI’s ongoing efforts to maintain ample liquidity, following recent rate cuts and a $100 billion liquidity infusion since December. The government retains the option to absorb up to ₹2,000 crore in additional subscriptions, further supporting market stability.
Bond Market Momentum: The 2035 bond auction is expected to double the outstanding amount of this security, enhancing its liquidity. The move also coincides with the RBI’s broader strategy of reinforcing monetary stability and supporting economic growth through proactive debt management.

With the underwriting commission set at a token level, the RBI’s latest auction underscores both the strength of India’s sovereign bond market and the central bank’s commitment to maintaining financial system stability.

Sources: NDTV Profit, Angel One, TradingView/Reuters