RBI Sets Underwriting Commission Cut-Offs at 0.74 Paise and 1.14 Paise for ₹36,000 Crore G-Sec Auction
The Reserve Bank of India (RBI) has announced the cut-off rates for underwriting commission payable to Primary Dealers (PDs) for the reissue of two long-tenor Government Securities (G-Secs). The underwriting auction, conducted through the Additional Competitive Underwriting (ACU) route, covered a cumulative notified amount of ₹36,000 crore.
According to the central bank, the cut-off commission rate for the 15-year paper, 7.06% GS 2041, was set at 0.74 paise per ₹100. For the ultra-long 50-year bond, 7.43% GS 2076, the cut-off rate was established at 1.14 paise per ₹100.
Auction Structure and Commitment Breakdown
The underwriting auction took place on November 6, 2026, using a multiple price-based auction format on the RBI's Core Banking Solution (e-Kuber) platform. Under the extant scheme of underwriting commitments originally notified on November 14, 2007, Primary Dealers must satisfy both a Minimum Underwriting Commitment (MUC) and bid competitively for the ACU portion.
The distribution of underwritten obligations across the two sovereign papers stood as follows:
7.06% GS 2041 (Notified Amount: ₹23,000 Crore):
- Minimum Underwriting Commitment (MUC): ₹11,508 crore was committed across participating PDs (with a per-dealer minimum obligation of ₹548 crore).
- Accepted ACU Amount: ₹11,492 crore was accepted via competitive bidding.
- Total Underwritten: ₹23,000 crore, ensuring 100% coverage.
- Commission Cut-Off: 0.74 paise per ₹100.
7.43% GS 2076 (Notified Amount: ₹13,000 Crore):
- Minimum Underwriting Commitment (MUC): ₹6,510 crore was committed across participating PDs (with a per-dealer minimum obligation of ₹310 crore).
- Accepted ACU Amount: ₹6,490 crore was accepted under competitive bids.
- Total Underwritten: ₹13,000 crore, completing full coverage of the tranche.
- Commission Cut-Off: 1.14 paise per ₹100.
The underwriting commission earned by Primary Dealers is credited directly to their current accounts with the RBI on the date of issue of the securities.
Significance for the Indian Debt Market
Underwriting auctions act as an essential risk-mitigation framework for sovereign debt issuances, guaranteeing that the entire borrowing requirement of the Government of India is pre-committed before securities hit the secondary auction block.
Modest underwriting fees—demanding only fractions of a single paisa per ₹100 of face value—indicate that Primary Dealers perceive low underwriting risk and anticipate ready market demand for long-dated paper. The 2041 and 2076 maturities are heavily tracked by institutional players such as life insurance companies, pension funds, and provident funds seeking long-term cash flow matching to hedge extended liability profiles.
By securing full underwriting at tight commission spreads, the central bank facilitates smooth market digestion of the sovereign borrowing programme without placing undue upward pressure on long-end domestic yields.
