RBI auctions ₹30,000 crore underwriting; OMO cut-offs

What the RBI announced

The Reserve Bank of India (RBI) said it will hold an underwriting auction for Government Securities (G-secs) worth ₹30,000 crore. The auction will be conducted through a multiple price-based method. Primary Dealers can submit bids electronically through the RBI’s Core Banking Solution (e-Kuber system). The bid window will be open between 9:00 am and 9:30 am on December 19.

Separately, the central bank released cut-off details for its ₹50,000 crore Open Market Operation (OMO) purchase of Government of India securities conducted on December 18. The RBI said detailed results of the OMO purchase will be issued shortly.

Underwriting auction: mechanism and participation

In the underwriting auction, the RBI will use a multiple price-based method, as specified in its announcement. Participation is through Primary Dealers, who will route bids electronically. The short bid window between 9:00 am and 9:30 am indicates the standard auction process used for such operations on the e-Kuber platform.

While the RBI did not provide additional parameters in the shared note beyond the amount, method and timing, the announcement places the underwriting operation alongside liquidity measures already in focus in the bond market. Market attention is typically on how such operations interact with ongoing OMO purchases and repo operations, especially during periods of liquidity deficit.

December 18 OMO purchase: aggregate and structure

For the December 18 OMO purchase, the RBI conducted the operation with an aggregate notified amount of ₹50,000 crore. It also clarified that no security-wise amount was pre-notified for this operation. The purchase covered seven government securities with maturities ranging from 2029 to 2054.

The securities included:

• 6.75% GS 2029
• 6.10% GS 2031
• 6.54% GS 2032
• 7.18% GS 2033
• 6.33% GS 2035
• 7.23% GS 2039
• 7.09% GS 2054

Where the RBI accepted the most bids

The highest acceptance in the December 18 OMO was for the 6.54% Government Security maturing in 2032, at ₹17,519 crore. This was followed by ₹11,801 crore for the 7.18% GS 2033 and ₹9,494 crore for the 6.33% GS 2035.

The RBI also accepted ₹6,272 crore for the 6.10% GS 2031, ₹2,744 crore for the 7.09% GS 2054, ₹1,764 crore for the 6.75% GS 2029 and ₹406 crore for the 7.23% GS 2039. These acceptance amounts show the RBI’s allocations across the curve, spanning medium to ultra-long maturities.

Cut-off yields and prices: what the range shows

The RBI reported that cut-off yields ranged from 6.1537% for the 2029 security to 7.2983% for the 2054 security. Cut-off prices ranged between ₹97.50 and ₹103.32. The wide maturity span naturally translated into a broad yield range.

Market participants noted the cut-off yield was as expected in the December 18 operation. Separately, reporting around OMO demand highlighted that a cut-off price in another OMO purchase was set below the secondary market price due to strong demand.

Key OMO results table (December 18 purchase)

Demand for liquidity: bids far above notified amounts

One RBI OMO purchase auction saw bids worth ₹1,39,000 crore against a notified amount of ₹50,000 crore, indicating a strong response from market participants. This was described as adding to ₹1,45,000 crore already injected by the RBI in December through OMO purchases and forex swaps.

In another instance, the RBI received bids worth ₹81,015 crore versus a notified amount of ₹40,000 crore, with treasury heads noting that banks and primary dealers offered bonds at more than double the notified amount to benefit from higher prices.

A separate report said the RBI received bids worth about ₹1,87,000 crore against a notified amount of about ₹40,000 crore at an OMO purchase auction, with public sector undertaking (PSU) banks described as major participants.

Liquidity operations beyond OMOs: VRR and planned auctions

At a 43-day Variable Rate Repo (VRR) auction referenced in the text, banks bid for ₹25,731 crore against a notified amount of ₹1,50,000 crore. In the same set of references, an OMO purchase of ₹40,000 crore in government securities received bids worth ₹81,015 crore.

The RBI also declared its intention to implement an OMO on April 17 by buying government securities of ₹40,000 crore. Apart from the OMO, it said it will hold a long-term 43-day VRR auction on April 17 to infuse another ₹1,50,000 crore into the banking system.

Market impact: what the numbers imply

The combined figures in the text point to sustained, high demand for RBI liquidity operations, particularly OMO purchases, where bids have exceeded notified amounts by wide margins in multiple instances. The December 18 OMO purchase itself had a notified amount of ₹50,000 crore and covered seven securities across a long maturity range, with the largest acceptance concentrated in the 2032, 2033 and 2035 maturities.

The broader context presented is a liquidity deficit, with the net liquidity shortfall cited at ₹1,77,000 crore as of February 19, 2025. Against this backdrop, the text also notes cumulative RBI injections of ₹2,00,000 crore via OMO auctions and $15 billion via foreign exchange swaps.

Analysis: why the underwriting and OMO details matter

The underwriting auction announcement and OMO cut-off disclosures arrive at a time when market participation appears sensitive to both liquidity conditions and bond pricing. Oversubscription levels, such as bids of ₹1,39,000 crore for a ₹50,000 crore OMO and about ₹1,87,000 crore for a ₹40,000 crore OMO, show that participants are actively using RBI windows to manage portfolios and liquidity needs.

The December 18 cut-off yield range of 6.1537% to 7.2983% and the cut-off price band of ₹97.50 to ₹103.32 provide a reference for how the RBI executed purchases across maturities from 2029 to 2054. Separately, the note that cut-off prices in an OMO were set below secondary market prices due to high demand signals the intensity of bidding and the pricing dynamics that can emerge in such auctions.

Conclusion

The RBI’s upcoming ₹30,000 crore underwriting auction on December 19 and the published cut-off details for the ₹50,000 crore OMO purchase on December 18 together underline how closely the central bank is using market operations and auction mechanisms. The December 18 purchase showed the largest acceptance in the 6.54% GS 2032 at ₹17,519 crore, with allocations spread across seven securities up to 2054 maturities. The RBI has also said detailed results of the OMO purchase will be issued shortly, keeping the market’s focus on execution details and follow-through in subsequent operations.