Latest news with #GovernmentSecurity
India Gazette
4 days ago
- Business
- India Gazette
RBI announces reissue of two Govt securities worth Rs 32000 crore, also open to accept extra Rs 2000 cr
Mumbai (Maharashtra) [India], June 3 (ANI): The Reserve Bank of India (RBI) has announced the re-issue of two Government of India dated securities worth a total of Rs 32,000 crore. A 're-issue' means the RBI is selling more of a bond that is already available in the securities market. This move is part of the government's regular borrowing program. The two securities being re-issued are the 6.92 per cent Government Security (GS) maturing on November 18, 2039, and the 6.90 per cent GS maturing on April 15, 2065. Each of these bonds will be issued for Rs 16,000 crore. Additionally, the RBI has kept the option open to accept up to Rs 2,000 crore extra for each security, depending on market demand. According to the RBI's announcement on Monday, the auction will be held on Friday, June 6, 2025. The settlement, when investors make payments and receive the securities, will take place on Monday, June 9, 2025. The sale will be conducted through the RBI's Core Banking Solution system, known as e-Kuber. Both competitive and non-competitive bids can be submitted electronically on the day of the auction. Non-competitive bids will be accepted between 12:30 p.m. and 1:00 p.m., while competitive bids can be submitted between 12:30 p.m. and 1:30 p.m. The auction will follow a multiple price method, meaning successful bidders will receive the securities at the prices they quote. The central bank also stated that primary dealers can bid for underwriting a part of the issue through the Additional Competitive Underwriting (ACU) facility. These bids will be accepted from 10:30 a.m. to 11:00 a.m. on the same day. The securities will be available for 'When Issued' trading from June 3 to June 6, allowing early trading before the official issuance. Retail investors can also participate through the RBI Retail Direct platform. Moreover, 5 per cent of the notified amount is reserved for eligible individuals and institutions under the non-competitive bidding scheme. This auction is part of the RBI's regular debt management process and offers a secure investment opportunity to investors. The Indian economy grew by 6.5 per cent in real terms in the recently concluded financial year 2024-25, Ministry of Statistics and Programme Implementation's official data showed. The official GDP growth data for the January-March (Fourth quarter) also showed that the economy grew 7.4 per cent during the quarter. During the April-June, July-September, and October-December 2024 quarters, the country's economy, in real terms, observed a growth rate of 6.7 per cent, 5.6 per cent, and 6.2 per cent, respectively. (ANI)
India Gazette
4 days ago
- Business
- India Gazette
RBI announces reissue of two Govt securities worth Rs 32000 crore
Mumbai (Maharashtra) [India], June 3 (ANI): The Reserve Bank of India (RBI) has announced the re-issue of two Government of India dated securities worth a total of Rs 32,000 crore. A 're-issue' means the RBI is selling more of a bond that is already available in the securities market. This move is part of the government's regular borrowing program. The two securities being re-issued are the 6.92 per cent Government Security (GS) maturing on November 18, 2039, and the 6.90 per cent GS maturing on April 15, 2065. Each of these bonds will be issued for Rs 16,000 crore. Additionally, the RBI has kept the option open to accept up to Rs 2,000 crore extra for each security, depending on market demand. According to the RBI's announcement on Monday, the auction will be held on Friday, June 6, 2025. The settlement, when investors make payments and receive the securities, will take place on Monday, June 9, 2025. The sale will be conducted through the RBI's Core Banking Solution system, known as e-Kuber. Both competitive and non-competitive bids can be submitted electronically on the day of the auction. Non-competitive bids will be accepted between 12:30 p.m. and 1:00 p.m., while competitive bids can be submitted between 12:30 p.m. and 1:30 p.m. The auction will follow a multiple price method, meaning successful bidders will receive the securities at the prices they quote. The central bank also stated that primary dealers can bid for underwriting a part of the issue through the Additional Competitive Underwriting (ACU) facility. These bids will be accepted from 10:30 a.m. to 11:00 a.m. on the same day. The securities will be available for 'When Issued' trading from June 3 to June 6, allowing early trading before the official issuance. Retail investors can also participate through the RBI Retail Direct platform. Moreover, 5 per cent of the notified amount is reserved for eligible individuals and institutions under the non-competitive bidding scheme. This auction is part of the RBI's regular debt management process and offers a secure investment opportunity to investors. The Indian economy grew by 6.5 per cent in real terms in the recently concluded financial year 2024-25, Ministry of Statistics and Programme Implementation's official data showed. The official GDP growth data for the January-March (Fourth quarter) also showed that the economy grew 7.4 per cent during the quarter. During the April-June, July-September, and October-December 2024 quarters, the country's economy, in real terms, observed a growth rate of 6.7 per cent, 5.6 per cent, and 6.2 per cent, respectively. (ANI)
The Hindu
12-05-2025
- Business
- The Hindu
The importance of Small Savings Schemes
Small Savings Schemes, kown as Post Office Savings Schemes, are a popular and useful means for people for channelising savings. Credit quality is top-notch as it is run by the government, and interest rates are competitive. Interest rates are fixed by the government every quarter e.g. the rates for the current quarter, April to June 2025, were announced on March 31. Today we will see, on what basis the rates are fixed by the government. Basis for fixing rates As per an old decision of the Government, the rate of interest on Small Savings Schemes will be aligned with Government Security (G-Sec) rates of similar maturity with a spread i.e. mark-up. As an example, the spread on Senior Citizens Savings Scheme will be 1% over comparable maturity G-Secs. The rationale for linking it to G-Sec yields in the secondary market is that it is in line with interest rate movements; G-Sec yield movements reflect actual and anticipated economic events pertaining to interest rate movement. To clarify the concept, let us say the benchmark G-Sec rate is X% and the mark-up as per the formula is Y%. Hence, the rate should be X% plus Y%. However, if the rate is higher, say X% plus Y% plus Z%, then Z represents the generosity of the Government for the benefit of citizens. The rates on Small Savings Schemes are reviewed every quarter. However, rates are not revised downward every quarter even when G-Sec rates are sliding, which is the 'Z' referred earlier. Prevailing rates Post Office Savings Deposit rate is 4%. Public Provident Fund (PPF), which is a 15-year scheme (though it can be extended), is supposed to have a spread of 25 basis points (100 bps = 1%). The relevant G-Sec rate (the average of G-Sec of corresponding maturity from December 2024 to February 2025) relevant for the quarter April to June, was 6.85%. By that logic, PPF rate is (6.85 + 0.25= 7.1%) maintained now. Post Office Term deposits of 1, 2 and 3-year maturity are to be at the corresponding G-Sec rate, without any markup. For a 5-year term deposit, the spread is 25 bps. Against the reference G-Sec yield of 6.62%, it should have been 6.87%. The rate for a 5-year TD is 7.5%. The excess interest is 0.63%. This 63 bps is the 'Z' referred earlier. Kisan Vikas Patra (KVP) is at zero spread; with reference point at 6.85% and rate at 7.5%, the additional interest over formula is 0.65%. For NSC VIII Issue, which is at a mark-up of 25 bps, formula rate is 7.04%. At 7.7%, the additional interest is 0.66%. Senior Citizen Savings Scheme (SCSS), mentioned earlier, has the highest spread of 1% over reference G-Sec yield, as a social benevolence to take care of seniors, who may not have active income. At the reference 5-year G-Sec yield of 6.62%, the formula rate is 7.62%. The rate on offer is 8.2%, implying an additional interest (Z) of 0.58%. Sukanya Samriddhi The last is the Sukanya Samriddhi Account Scheme, which has the longest tenure of 21 years. The formula mark-up is 75 bps. The reference G-Sec yield is 6.85%. Against the formula rate of 7.6%, the rate is 8.2%. The additional interest a girl child would get this quarter is 0.6%. Interest rates are coming down, as the Reserve Bank of India (RBI) has been reducing the reference repo rate. The repo rate, which was 6.5% earlier, is at 6% now. It is expected that the RBI would cut the repo rate further. This is driven by lower inflation and economic growth being a little lower than earlier. Consequently, G-Sec yields have eased. As an example, 10-year maturity G-Sec, which was at 7.2% a year ago and 6.85% six months ago, is at 6.36% now. The reference G-Sec yield levels mentioned earlier pertain to the period December 2024 to February 2025. Since then, G-Sec yields are lower. The implication is, when rates for next quarter viz. July to September are announced on June 30, the reference point will be lower. Conclusion We have mentioned earlier, there is a 'generosity component' or 'Z' component in the currently prevailing Small Savings rates. With the reference rate coming down, if the government maintains the current rates, the 'Z' component will be higher. While it is possible it maintains current rates as there is a political implication of cutting it, pressure will be higher on government's finances. Hence there is a possibility Small Savings rates may be reduced going forward. From that perspective, if you have the money, it is advisable that you lock-in by June. (The writer is a corporate trainer (financial markets) and author)
