RBI to sell government securities worth Rs. 17,000 crore

The Reserve Bank of India (RBI) is selling five government securities (G-secs) worth Rs. 17,000 crore on August 23, 2019 (Friday). However, the government has the flexibility to hold additional subscription to Rs. 1,000 crore each against any of the five securities.

RBI has informed that eligible individuals and institutions will be allotted up to 5 per cent of the notified amount of the sale of the stocks. According to RBI, both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on Friday.

The G-sec market is dominated by institutional investors like banks, insurance companies, mutual funds and provident funds. However, in an aim to bring in larger participation, RBI has allowed the retail investors to participate on a “non-competitive” basis in select auctions of dated Government of India (GoI) securities and Treasury Bills.

In these auctions, the retail investors can make a single bid for an amount not more than Rs. 2 crore (face value) per security per auction.

By selling government securities, the RBI may contract the amount of money in the financial system and thus follow its monetary policy.

The move will especially suit pensioners looking for a safe investment option that can give them assured returns for the long term.

G-Secs seem to be a good option for senior citizens, retirees or pensioners who are looking for a safe investment alternative that can fetch them assured income for the long-term. Meanwhile, keep a note that this income will be fully taxable.