RBI Sets Underwriting Fees for ₹32,000 Crore Government Bond Sale

MUMBAI — The Reserve Bank of India (RBI) established the underwriting commission rates payable to Primary Dealers for the competitive underwriting auction of four central government debt securities totaling ₹32,000 crore.

The fee announcement precedes the primary auction scheduled by the central bank as part of the Government of India’s market borrowing program. The commission structure provides primary dealers compensation for guaranteeing subscription volume across short, medium, and ultra-long maturities.

Central Bank Underwriting Commission Breakdown

According to the central bank's announcement, commission rates vary based on the tenor and risk profile of each individual security. The 7.50% Sovereign Green Bond 2056 fetched the highest fee rate among the issuance group.

Commission Rates Fixed by RBI

• 7.50% Sovereign Green Bond 2056: Commission fixed at 0.0058 rupee per 100 rupees.

• 7.24% Government Bond 2055: Commission fixed at 0.0044 rupee per 100 rupees.

• New Government Bond 2033: Commission fixed at 0.0032 rupee per 100 rupees.

• New Government Bond 2029: Commission fixed at 0.0023 rupee per 100 rupees.

+----------------------------------------+------------------+-----------------------------+
| Government Security                    | Notified Amount  | Underwriting Commission     |
+----------------------------------------+------------------+-----------------------------+
| New Government Bond 2029               | ₹11,000 Crore    | ₹0.0023 per ₹100 face value |
| New Government Bond 2033               | ₹11,000 Crore    | ₹0.0032 per ₹100 face value |
| 7.24% Government Security 2055         | ₹5,000 Crore     | ₹0.0044 per ₹100 face value |
| 7.50% Sovereign Green Bond (SGrB) 2056 | ₹5,000 Crore     | ₹0.0058 per ₹100 face value |
+----------------------------------------+------------------+-----------------------------+

(Source: Central Bank Communications & Debt Management Disclosures)

Debt Auction Mechanics and Framework

Primary Dealers (PDs) absorb minimum underwriting commitments before additional competitive underwriting (ACU) bids are accepted via the electronic e-Kuber portal. Underwriting guarantees that the entire notified loan amount is absorbed without under-subscription risks during government borrowing operations.

Longer-tenor assets, such as the 30-year 2055 bond and the 2056 green bond, carry higher commission cut-offs due to duration risk and interest rate sensitivity inherent in long-dated sovereign instruments.

Official Sources Section

Information regarding the borrowing schedule and underwriting commission rates is published directly by the central bank under statutory powers managing government public debt. Official regulatory notices and financial releases are cataloged on the Reserve Bank of India public portal and integrated with market infrastructure systems like the National Stock Exchange of India and BSE Limited.

Quote Section

"According to central bank disclosures, the underwriting commission payable to Primary Dealers is determined via multiple-price auction methods to ensure smooth absorption of the government's market borrowing requirements across all maturity buckets," officials stated.

Why It Matters

Underwriting commission rates reflect market sentiment, liquidity conditions, and risk premiums demanded by market intermediaries. Higher fees on long-dated and green papers indicate higher duration risk, guiding pricing expectations for banks, mutual funds, primary dealers, and institutional bond investors.

Key Facts at a Glance

• Total Auction Notified Amount: ₹32,000 crore across four separate bond series.

• Highest Commission Rate: ₹0.0058 per ₹100 for the 7.50% Sovereign Green Bond 2056.

• Lowest Commission Rate: ₹0.0023 per ₹100 for the New Government Bond 2029.

• Auction Platform: Conducted electronically via RBI's e-Kuber system.

Frequently Asked Questions (FAQ)

What is an underwriting commission in government bond auctions?

An underwriting commission is a fee paid by the Reserve Bank of India to Primary Dealers for guaranteeing the purchase of unsubscribed government bonds during debt auctions.

Which bond carried the highest underwriting commission?

The 7.50% Sovereign Green Bond 2056 carried the highest commission cut-off at ₹0.0058 per ₹100 face value.

What was the commission for shorter-tenor bonds?

The New Government Bond 2029 attracted an underwriting commission rate of ₹0.0023 per ₹100 face value.

Source: Reserve Bank of India, BSE Limited, and National Stock Exchange of India.