Summary of this article
Government to raise Rs 32,000 crore via bonds
Bonds offer fixed interest, low-risk investment option
Retail investors can participate through RBI portal
The Government of India will raise Rs 32,000 crore by issuing two long-term Government Securities (GS), or government bonds. These are the 6.68 per cent GS 2040 and 6.90 per cent GS 2065, with Rs 16,000 crore notified for each. Auction will be on September 26, 2025, and settlement will be announced on September 29, 2025.
The government will also keep an additional Rs 2,000 crore for each of these bonds in case of huge demand. When-issued trading (the conditional buying and selling of a security that has been announced but not yet officially issued or finalised) will be permitted from September 23 to September 26, which allows investors to purchase or sell these securities prior to their issuance.
Why Are These Bonds Important
Government Securities are the one of the most secure investment options, guaranteed by the central government. They also represent a critical means of fundraising for the government to finance its spending and discharge fiscal obligations. By selling 2040 and 2065 bonds, the government provides for a long-term spread of repayment pressures off the near term, lowering the burden on redemptions in the near future. To investors, these instruments offer fixed semi-annual interest rates and serve as a low-risk vehicle for diversifying the portfolio.
For financial year 2025-26, the government has fixed a gross borrowing of more than Rs 14 lakh crore. Auctions like this are part of the borrowing schedule and serve to provide for continuing expenditure requirements. Issuance in various maturities also sets benchmarks in the bond market, which are adopted by state governments and firms when they tap the capital markets.
Who Can Buy These Bonds
These auctions are inclusive of a wide range of participants. Banks, insurance corporations, provident funds, and mutual funds generally control the competitive bidding process. For retail investors, the Reserve Bank of India has reserved up to 5 per cent of the notified volume under the facility of non-competitive bidding. This makes sovereign bonds accessible to retail investors and small institutions without directly competing with the larger financial units.
How To Purchase Them
Retail investors can purchase these securities through the Reserve Bank of India’s (RBI) Retail Direct portal (https://rbiretaildirect.org.in). The platform enables individuals to open a gilt account with the RBI at no cost. The minimum investment is Rs 10,000, and bids must be placed in multiples of Rs 10,000. Under the non-competitive route, retail investors do not need to quote a price or yield. They are allotted securities at the weighted average yield decided during the competitive bidding process.
The Auction Process
The sale will be made by the multiple price method. Successful competitive bidders pay the very amount they bid, so yields can vary slightly between them. Non-competitive bids can be accepted from 10:30 a.m. to 11:00 a.m. on September 26, while competitive bids can be accepted up to 11:30 a.m. Results will be made available on the same day, and successful bidders' payments are due on September 29.
What Investors Should Remember
The coupon rates on the bonds, 6.68 per cent and 6.90 per cent, are fixed but the yield or actual return will be different based on the price paid at the auction. When bonds are allotted at a price higher than face value, the yield is less than the coupon, and allotments below face value result in higher yields. Interest is paid half yearly, and these securities are saleable in the secondary market, making it possible for investors to sell prior to maturity if need be.
Together, the government plans to collect Rs 32,000 crore from this auction, adding to its borrowing program while providing investors with a chance to purchase long-term, government-guaranteed securities. Retail investors get an easy and transparent way of entering the bond market through the Retail Direct platform.
