RBI Sets Underwriting Commission for Long-Dated Bonds: 2065 & 2040 Issues

RBI’s Move to Strengthen Bond Market Operations

The RBI has announced underwriting commission rates for two long-dated government securities, reinforcing its focus on transparent debt market operations. Underwriting commissions are paid to primary dealers who guarantee subscription of government bonds, ensuring auction success and liquidity in the secondary market.

Key Highlights:

• 2065 Bonds: Commission fixed at ₹0.0107 per ₹100 face value.
• 2040 Bonds: Commission set at ₹0.0094 per ₹100 face value.
• Role of Primary Dealers: These institutions underwrite government securities, absorbing unsold portions to stabilize auctions.
• Market Impact: The rates reflect RBI’s calibrated approach to incentivize dealers while keeping costs minimal.
• Debt Strategy: Long-dated bonds like 2040 and 2065 help spread borrowing costs and manage fiscal pressures over decades.
• Investor Confidence: Transparent commission structures enhance credibility and support broader participation in India’s sovereign debt market.

By setting clear underwriting terms, the RBI ensures smooth functioning of auctions, bolstering India’s debt management framework and investor trust in long-term securities.

Sources: Reserve Bank of India release, Economic Times, Business Standard