Govt to repurchase Rs 20,000 crore bonds in RBI auction on Thursday

The government plans to repurchase Rs 20,000 crore worth of government bonds through a buyback auction to be conducted by the Reserve Bank of India (RBI) on Thursday. The bonds offered for buyback include:

• 7.72 per cent 2025 bond maturing on May 25
• 5.22 per cent 2025 bond maturing on June 15
• 8.2 per cent 2025 bond maturing on September 24
• 5.15 per cent 2025 bond maturing on November 9
• 7.59 per cent 2026 bond maturing on January 11 

Tight liquidity conditions in the banking sector, influenced by foreign exchange market interventions, government cash flow fluctuations, and currency leakage, have exacerbated the deficit. The liquidity shortfall in the banking system was Rs 1.93 trillion, according to the latest RBI data.

 

 

The bond repurchase will allow the government to reduce its liabilities and improve its fiscal position. By repurchasing outstanding bonds before maturity, the government lowers its total debt burden. The process involves using government funds to buy back bonds, which are then retired, reducing the overall outstanding debt. This approach enables the government to strengthen its debt profile by targeting higher-cost or shorter-term bonds for buyback.