RBI reverts to multiple price auctions

The Reserve Bank of India (RBI) will conduct auctions for all central government securities through multiple price-based method from this financial year, nearly three years after it changed its methodology, the central bank said.

Barring the ultra-long duration which consists of bonds maturing in 30 years and above, the RBI conducted auctions for bonds through uniform-based pricing since July 2021.

Under the multiple price auctions, buyers are allotted bonds at the price they bid at, while uniform pricing means bonds are sold at the cutoff level.

India aims to borrow Rs. 7.50 lakh crore ($90 billion) via bonds in April-September, 53% of its annual borrowing target of Rs. 14.13 lakh crore.

“All securities under the market borrowing programme shall, henceforth, be auctioned using multiple price auction method,” the RBI said in a statement, following a review of market conditions.

“This was a demand from market participants, and this step is good for overall market development,” said Vijay Sharma, senior executive vice president at PNB Gilts.