The Government of India has announced the sale of two dated securities with a total notified amount of ₹32,000 crore through an underwriting auction process. According to the latest notification from the Reserve Bank of India, the auction includes 6.36% GS 2031 for ₹21,000 crore and 7.71% GS 2066 for ₹11,000 crore. The securities will be issued/re-issued using the multiple price-based method with the entire notified amount subject to this underwriting process. The auction will be conducted by the Reserve Bank of India at its Mumbai office through the E-Kuber electronic platform on August 07, 2026 (Friday).
Simultaneously, the government has launched a 6.5% stake divestment in LIC via an Offer for Sale at a floor price of ₹382 per share to raise up to ₹31,000 crore and meet SEBI's minimum public shareholding guidelines. The government is selling a base 2.5% stake in LIC with an option to offload an additional 4% via a green shoe option, totaling up to 6.5% of the company's equity. The floor price represents a 10% discount to LIC's closing price of ₹424.35 on Monday, August 3, 2026, with the stake sale of 82.22 crore shares expected to fetch the government's disinvestment target. The government's current 96.5% stake in LIC will be reduced to 90% after the OFS, with SEBI granting LIC time until May 2027 to achieve the minimum public shareholding requirement. The government had earlier divested 3.5% of LIC through its IPO in May 2022 at a price band of ₹902-949 per share, raising around ₹21,000 crore. LIC currently has a market capitalisation of more than ₹5.36 lakh crore.
The auction follows an underwriting auction mechanism where Primary Dealers act as underwriters, committing to purchase any unsold portion of the bonds. According to the RBI's underwriting commitment scheme, Primary Dealers have a Minimum Underwriting Commitment (MUC) of ₹500 crore for 6.36% GS 2031 and ₹262 crore for 7.71% GS 2066. They are required to place bids for at least ₹500 crore (6.36% GS 2031) and ₹262 crore (7.71% GS 2066) for each security under the Additional Competitive Underwriting (ACU) auction. The underwriting commission will be credited to their accounts on the day the securities are issued. This mechanism ensures the government raises funds smoothly for its expenditure needs, even if market demand is uncertain.
The government has reserved up to 5% of the notified amount for eligible individuals and institutions under the Non-Competitive Bidding Facility. According to the notification, this facility is intended to encourage wider participation and greater retail holding of Government securities and Treasury Bills. Retail investors can participate through an authorised aggregator or facilitator, such as scheduled banks, primary dealers, and specified stock exchanges, or by maintaining a Retail Direct Gilt (RDG) Account with the RBI. Investors may submit only one bid per security in an auction with a minimum investment of ₹10,000, thereafter in multiples of ₹10,000, with the maximum bid amount capped at ₹2 crore (face value) per security per auction. If the total non-competitive bids exceed the reserved allocation, securities will be allotted on a pro-rata basis, while if bids are below the reserve price, the shortfall will be transferred to the competitive portion of the auction.
Both securities will be eligible for 'When Issued' trading in accordance with RBI guidelines. The 6.36% GS 2031 will mature on February 16, 2031, while the 7.71% GS 2066 will mature on May 18, 2066. Interest on the securities will accrue from the original issue or the last coupon payment date and will be paid on a half-yearly basis, while redemption will take place at par on the respective maturity dates. The notification permits aggregators and facilitators to recover brokerage, commission, or service charges up to six paise per ₹100 from clients for non-competitive bidding services, though no other costs including funding costs may be built into the sale price or recovered from investors. The operational guidelines for the non-competitive bidding facility will remain subject to periodic review by the Reserve Bank of India.
