The Finance Ministry has announced that on 26 September, the RBI will auction two long-term government bonds in Mumbai to raise Rs 32,000 crore. 6.68% Government Bond 2040: Rs 16,000 crore. 6.90% Government Bond 2065: Rs 16,000 crore. Potential extra allotment of Rs 2,000 crore per bond could take the total to Rs 36,000 crore.
How the Auction Works? Bids will follow a multi-price, yield-based system. Non-competitive bids: 5% reserved for retail and institutional investors. Bid timing: Non-competitive: 10:30–11:00 AM. Competitive: Until 11:30 AM. Results: Same day; successful bidders must pay by 29 September.
Why Invest in Government Bonds? Bonds help the government raise funds for infrastructure and other needs. Investors earn regular interest and enjoy high safety, as they are government-backed. Bonds provide a stable, low-risk investment option compared to equities.
Benefits for Investors: Low risk: Government-backed, minimal chance of loss. Regular income: Interest paid at fixed intervals. Capital protection: Preserves principal. Portfolio diversification: Reduces overall investment risk.
Additional Advantages: Potential price appreciation: Bond values may rise when interest rates fall. Liquidity: Sell anytime if you need cash. Better long-term returns: Can outperform fixed deposits (FDs) over time. Ideal for investors seeking safety, stable returns, and portfolio balance
