RBI Sets ACU Commission Cut-Off at 0.54 Paise per Rs 100 for Rs 34000 Crore Auction of 6.94% GS 2036

The Reserve Bank of India (RBI) announced the cut-off rate for underwriting commissions payable to Primary Dealers (PDs) for the 10-year maturity tranche, setting the Additional Competitive Underwriting (ACU) commission cut-off at 0.54 paise per ₹100 for the 6.94% Government Stock (GS) 2036 paper.

The central bank conducted the underwriting auction under the government’s scheduled market borrowing programme, fully securing primary market backing for the ₹34,000 crore issuance.

Auction Structure and Underwriting Allocation

Under the central bank's underwriting framework, primary dealers provide institutional safety nets to eliminate devolution risks on the sovereign debt issuance. The underwriting arrangement for the 6.94% GS 2036 paper comprised:

• Notified Amount: ₹34,000 crore
• Minimum Underwriting Commitment (MUC): ₹17,010 crore
• Additional Competitive Underwriting (ACU) Accepted: ₹16,990 crore
• Total Underwritten Amount: ₹34,000 crore
• ACU Commission Cut-Off Rate: 0.54 paise per ₹100

Bids were submitted electronically through the Reserve Bank of India’s Core Banking Solution (e-Kuber system) using a multiple price-based auction methodology. Commissions determined through the bidding process are credited directly to the current accounts of the qualifying primary dealers on the settlement date.

Significance for Debt Markets and Institutional Investors

The underwriting commission cut-off serves as an important gauge of dealer appetite, secondary market volatility expectations, and issuance risk absorption. A commission level of 0.54 paise per ₹100 reflects the yield dynamics and duration risk that primary dealers price into intermediate-to-long maturity central government dated securities.

For institutional market participants—including mutual funds, scheduled commercial banks, pension funds, and insurance companies—the successful underwriting without any shortfall or risk of devolvement ensures consistent primary supply matching market yields.

The 6.94% GS 2036 issuance forms a critical pillar of the Centre's annual borrowing calendar, establishing benchmark pricing for state development loans (SDLs) and corporate debt instruments spanning comparable 10-to-12-year tenors. Robust dealer participation underscores steady liquidity conditions within India's sovereign bond ecosystem.

Tags: Reserve Bank of India Government Securities Indian Bond Market Primary Dealers Ministry of Finance Fixed Income