RBI Sets Underwriting Commission Cut-Offs in September 12 G-Sec Auction

The Reserve Bank of India (RBI) conducted an underwriting auction for government securities on September 12, 2025. The auction covered bonds maturing in 2030 (6.01% GS) and 2055 (7.24% GS) for Rs 15,000 crore and Rs 13,000 crore, respectively.

The Reserve Bank of India (RBI) on Friday announced the results of its latest underwriting auction for government securities, fixing the cut-off rates for underwriting commission payable to primary dealers. The auction, held on September 12, 2025, covered two sets of government bonds with maturities in 2030 and 2055.

For the 6.01 per cent Government Security (GS) maturing in 2030, the notified amount was fixed at Rs 15,000 crore. The minimum underwriting commitment (MUC) stood at Rs 7,518 crore, while the accepted ACU amount was Rs 7,482 crore, bringing the total amount underwritten to the full Rs 15,000 crore. The RBI set the cut-off underwriting commission rate at 0.49 paise per Rs 100.

In the case of the 7.24 per cent GS maturing in 2055, the notified amount was Rs 13,000 crore. Here, the MUC was pegged at Rs 6,510 crore, and the ACU amount accepted was Rs 6,490 crore, once again taking the total underwritten to the notified amount of Rs 13,000 crore. The cut-off commission rate was determined at 0.70 paise per Rs 100.

According to the RBI press release, the underwriting auction was conducted under the Additional Competitive Underwriting (ACU) mechanism, which is a process used by the central bank to ensure full subscription of government securities in case market participants do not bid adequately in the primary auctions. Primary dealers were required to underwrite a portion of the borrowing programme and, in return, are compensated through underwriting commissions determined by competitive bidding.

The underwriting process ensures a smooth borrowing programme for the government, giving confidence to the market that the borrowing requirements will be met without disruption.

Underwriting plays a key role in India's debt market operations. By mandating primary dealers to take on underwriting responsibilities, the RBI secures a safety net that protects against the risk of under-subscription. In return, primary dealers earn a commission, which is decided through a competitive bidding process. The cut-off rate signifies the highest rate at which the underwriting obligation is accepted, and it reflects the appetite and pricing expectations of market participants.

The RBI conducts such underwriting auctions in line with the government's market borrowing calendar.

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