MUMBAI: The Reserve Bank of India (RBI) will sell government bond worth Rs 4.73 lakh crore in January-March quarter of 2025 for state governments and Union Territories. The weekly schedule of auctions to be held during the quarter, along with the name of States/UTs who have confirmed participation, will be notified, the RBI added.
The central bank informed that the actual amount of borrowings and the details of the States/UTs participating would be intimated by way of press releases two/three days prior to the actual auction day and would depend on the requirement of the State Governments/UTs, approval from the Government of India under Article 293(3) of the Constitution of India and the market conditions.
“The RBI would endeavour to conduct the auctions in a non-disruptive manner, taking into account the market conditions and other relevant factors and distribute the borrowings evenly throughout the quarter”, the RBI added. The central bank stated that the RBI reserves the right to modify the dates and the amount of auction in consultation with State Governments/UTs.
Government bond or Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments. It acknowledges the Government’s debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more).
In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs). G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.
A bond is a debt instrument in which an investor loans money to an entity (typically corporate or government) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money to finance a variety of projects and activities. Owners of bonds are debt holders, or creditors, of the issuer. (ANI)