Finance Ministry Announces ₹28,000 Crore Government Securities Auction with Retail Participation Reserved

The Ministry of Finance has notified the re-issue of two long-term Government Securities totalling a notified amount of ₹28,000 crore, incorporating a specific non-competitive bidding facility for retail investors. The auction, managed by the Reserve Bank of India, includes a green-shoe option allowing the Centre to retain an additional subscription of up to ₹4,000 crores across the two tranches.

Background

The Notification F.No. 4(1)-B(WM)/2026 was issued by the Budget Division of the Department of Economic Affairs on September 10, 2026. This instrument facilitates the re-issue of existing dated securities to meet the Government of India's borrowing requirements. The sale is conducted under the terms and conditions established by the General Notification F.No.4(2)B(WM)/2018. The notification serves to detail the specific pricing methods, auction timelines, and interest accrual parameters for the upcoming debt issuance.

Stakeholders Impacted

This update directly impacts primary dealers, scheduled commercial banks, and institutional investors who participate in the competitive bidding process via the E-Kuber platform. It significantly affects 'retail investors', defined as individuals, firms, companies, corporate bodies, institutions, provident funds, and trusts. Additionally, Regional Rural Banks (RRBs) and Cooperative Banks are identified as eligible non-competitive bidders due to their statutory requirements, while non-government provident funds governed by the Provident Funds Act, 1925 are noted for their specific eligibility in Treasury Bill auctions.

Key Provisions

Notified Amounts and Green Shoe Option:

The government announced the sale of two securities: the 7.06 GS 2041 for a notified amount of ₹17,000 crore and the 7.43 GS 2076 for ₹11,000 crore. Both will be sold using the price multiple method. The notification grants the Government the option to retain additional subscriptions up to ₹2,000 crore against each of the two securities.

Non-Competitive Bidding for Retail Investors:

Up to 5% of the notified amount of the sale is reserved for eligible retail investors. Individuals and entities can submit a single bid for an amount not exceeding ₹2 crore (face value) per security. Retail participants must utilize the services of an 'Aggregator' such as a scheduled bank or primary dealer or maintain a Retail Direct Gilt (RDG) account with the Reserve Bank of India.

Interest Accrual and Repayment Schedule:

Interest on the nominal value will be paid half-yearly. For the 7.06 GS 2041, interest is payable every January 27 and July 27, while for the 7.43 GS 2076, payments are scheduled for January 19 and July 19. The securities will be repaid at par upon maturity on July 27, 2041, and January 19, 2076, respectively.

Practical/Compliance Impact

Investors and aggregators must adhere to a strict auction timeline on September 18, 2026. Non-competitive bids must be submitted on the E-Kuber system between 10:30 a.m. and 11:00 a.m., while competitive bids are accepted until 11:30 a.m. Successful bidders are required to complete payments by September 21, 2026, which must include accrued interest from the last coupon payment date. Aggregators are permitted to charge a maximum brokerage/service fee of six paise per ₹100. The securities are also eligible for 'When Issued' trading in accordance with guidelines issued by the Reserve Bank of India guidelines, allowing for market activity prior to the formal re-issue date.

Effective Date

The notification was issued on September 10, 2026. The auction is scheduled to take place on September 18, 2026, with the results published the same day and the final settlement/re-issue date set for September 21, 2026.