The Government of India on October 30, 2023 announced the sale of dated securities worth Rs. 30,000 crore. These include 7.37% GS 2028, 7.18% GS 2033, and New GS 2073.
The auction, which is scheduled for November 3, 2023, will employ a uniform price method for the 7.37% GS 2028 and 7.18% GS 2033, and a multiple price method for New GS 2073. Successful bids for New GS 2073 will be accepted at the quoted yield or price, while uniform price-based bids will be accepted for other two securities at the cut-off yield or price determined in the auction, according to a press release from the Reserve Bank of India (RBI).
“GoI will have the option to retain additional subscription up to Rs 2,000 crore against each security mentioned above,” the RBI said in a press release.
According to the release, the auction process will allow both competitive and non-competitive bids, which must be submitted electronically through the RBI Core Banking Solution (e-Kuber) system. “The non-competitive bids should be submitted between 10:30 am and 11:00 am and the competitive bids should be submitted between 10:30 am and 11:30 am,” the release said.
The release added that the result will be announced on the same day and the payment by successful bidders will have to be made on November 6, 2023, when the date of settlement of these securities has also been set as the same date. The Government securities (G-secs) will be issued for a minimum amount of Rs 10,000 (Face Value) and in multiples of Rs 10,000 thereafter, the release said.
Incidentally, the coupon rates for the securities are rates denoted in the name of securities except for New GS 2073, where the interest will be yield based. Interest will accrue on the nominal value of the securities from the date of issue and will be paid on a half-yearly basis. The securities will only be repaid upon reaching their respective maturity dates, with senior citizens allowed premature withdrawal in four or five years depending on the tenure of the bonds.
Investing in government bonds, particularly long-term ones, offers investors stability and security. These bonds, typically with maturities of seven years or more, can be traded in the secondary market. However, investors must be aware of potential price fluctuations in the secondary market, which could result in capital losses if the bonds are sold at lower prices.
Premature withdrawals are possible based on age, with individuals over 60 allowed to withdraw funds after four or five years, depending on the bond. Additionally, investors should account for taxes on the interest earned, as it forms part of their taxable income.
One can buy these bonds from various places, such as banks, post offices, brokerage firms, gilt mutual funds, and the RBI Retail Direct scheme.