RBI Fixes Commission Rates for Rs. 6,000 Cr GS 2028 and Rs. 36,000 Cr GS 2035 Underwriting
MUMBAI (India CSR): The Reserve Bank of India (RBI) recently held an underwriting auction to support the government’s borrowing plans. In simple terms, the government borrows money by selling bonds (called Government Securities) to raise funds for development projects. To make sure these bonds are fully sold, RBI asks a group of banks and financial institutions called Primary Dealers to underwrite or guarantee the purchase of these bonds.
The Reserve Bank of India (RBI) on Friday announced the cut-off underwriting commission rates for Government securities under the Additional Competitive Underwriting (ACU) mechanism. The underwriting auction, conducted on September 19, 2025, covered two Government securities worth a total notified amount of Rs. 42,000 crore.
According to the RBI release, the securities underwritten include the 5.91% GS 2028 with a notified amount of Rs. 6,000 crore and the 6.33% GS 2035 with a notified amount of Rs. 36,000 crore. The minimum underwriting commitment and the ACU amounts together accounted for the total notified sum.
For the 5.91% GS 2028, the minimum underwriting commitment stood at Rs. 3,003 crore, while the additional competitive underwriting amount accepted was Rs. 2,997 crore. The cut-off commission rate was fixed at 0.18 paise per Rs. 100.
For the 6.33% GS 2035, the minimum underwriting commitment was ₹15,015 crore and the ACU amount accepted was Rs. 14,985 crore. The cut-off commission rate was set at 0.40 paise per Rs. 100.
The RBI confirmed that the auction for the sale of these securities will also be held on September 19, 2025. Primary Dealers, responsible for underwriting the Government’s borrowing programme, will play a key role in ensuring smooth completion of the auction.
The Additional Competitive Underwriting system is designed to strengthen the Government securities market by providing certainty in fund-raising and creating a transparent process for underwriting commissions.
The announcement was made by Ajit Prasad, Deputy General Manager (Communications), RBI.
| Key Fact | Details |
|---|---|
| Event | RBI Underwriting Auction |
| Date | September 19, 2025 |
| Purpose | To fix commission rates for Primary Dealers underwriting Government bonds |
| Total Securities | ₹42,000 crore |
| Security 1 | 5.91% GS 2028 |
| Amount | ₹6,000 crore |
| Commission Rate | 0.18 paise per ₹100 |
| Security 2 | 6.33% GS 2035 |
| Amount | ₹36,000 crore |
| Commission Rate | 0.40 paise per ₹100 |
| Outcome | Primary Dealers will underwrite entire ₹42,000 crore bond sale |
Impact on the Market
- Smooth Borrowing: By fixing commission rates and ensuring underwriting, the RBI guarantees that the government can raise funds without disruption.
- Investor Confidence: When Primary Dealers underwrite government bonds, it assures investors that demand will remain stable, keeping the bond market healthy.
- Interest Rates: If borrowing is managed smoothly, it prevents sudden spikes in interest rates, which benefits businesses and households who take loans.
- Liquidity: The large size of the auction (₹42,000 crore) puts more bonds in the market, which can influence demand-supply and bond yields.
Impact on States
- Benchmark Rates: Government bond yields act as benchmarks. If yields rise, states may have to borrow at higher costs for their own development projects.
- Fiscal Discipline: With RBI stressing on fiscal prudence, states are reminded to manage their own borrowings responsibly.
- Funding Access: A successful central government auction gives states more confidence to issue their own bonds later in the year.
You Learn
In this auction, held on September 19, 2025, the RBI set the rules for how much commission these dealers will earn for taking the risk of buying the bonds. Two bonds were covered – one worth Rs 6,000 crore (maturing in 2028) and another worth Rs. 36,000 crore (maturing in 2035). The commission rates decided were 0.18 paise per Rs 100 for the 2028 bond and 0.40 paise per Rs 100 for the 2035 bond.
(India CSR)
