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Changes in Government Securities Auction Methodology

Published on July 07, 2021
Current Context: The Reserve Bank of India announced changes in Government securities auction methodology for benchmark securities.
Changes in Government Securities Auction Methodology
  • The changes in benchmark securities of tenor 2-year, 3-year, 5-year, 10-year, 14-year tenor and Floating Rate Bonds (FRBs) are announced by the central bank.
  • The decision was taken according to the review of market status, market borrowing program of the government.
  • Henceforth, there will be ‘Uniform price auction method’ for benchmark securities of tenor 2-year, 3-year, 5-year, 10-year, 14-year tenor and FRBs. Under this method, all the successful bidders are required to pay for the allotted quantity of securities at the same rate, which is the auction cut-off rate, irrespective of the rate quoted by them.
  • For other benchmark securities i.e. 30-year and 40-year, the auction will continue to be multiple price-based auctions. In the case of multiple price-based auctions, the successful bidders are required to pay for the allotted quantity of securities at the respective price/yield at which they have bid.
  • Static Part: 
    • HQ of RBI: Mumbai
    • Governor of RBI: Shaktikant Das
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