What happened
The Government of India has announced a switch auction of its securities for a total of ₹20,000 crore in face value. It will be held on Monday, 19 October 2026, according to an RBI press release dated 14 October.
In a switch (also called a conversion), holders of one government bond hand it back to the government and receive another bond in exchange. The bond given up is the source security. The bond received is the destination security.
Six pairs are on offer:
| Source security | Amount (₹ crore) | Destination security |
|---|---|---|
| 8.26% GS 2027 (matures 2 Aug 2027) | 2,000 | 7.19% GS 2060 (15 Sep 2060) |
| 7.17% GS 2028 (8 Jan 2028) | 3,000 | 7.41% GS 2036 (19 Dec 2036) |
| 7.06% GS 2028 (10 Apr 2028) | 3,000 | 7.23% GS 2039 (15 Apr 2039) |
| 7.26% GS 2029 (14 Jan 2029) | 4,000 | 6.64% GS 2035 (16 Jun 2035) |
| 6.03% GS 2029 (27 Jan 2029) | 4,000 | 7.50% GS 2034 (10 Aug 2034) |
| 6.79% GS 2029 (26 Dec 2029) | 4,000 | 7.57% GS 2033 (17 Jun 2033) |
Participants bid on the RBI’s e-Kuber platform between 10:30 AM and 11:30 AM on 19 October. The result will be announced the same day. Settlement, when the bonds and money actually change hands, is on Wednesday, 21 October.
How the auction works
The auction is multiple-price. Each successful bid is accepted at the prices the bidder quoted, not at one common price.
The price quoted for the source security must match the FBIL closing price of the previous working day. FBIL is the benchmark administrator whose closing prices serve as the reference. Bids at any other source price are rejected. The cut-off is decided on the price of the destination security. Bids at or above the cut-off succeed, and lower bids are rejected. If several bids sit exactly at the cut-off, allotment is pro-rata, meaning shared in proportion.
The minimum bid is ₹10,000, in multiples of ₹10,000. A bidder cannot offer more of a source bond than it holds.
The government may accept less than the notified amount, take marginally more because of rounding, or accept or reject any offer in whole or part without giving a reason.
What it means for you
Only market participants bid through e-Kuber, so most individuals will not take part directly. The switch swaps existing debt for longer-dated debt, so it changes the pattern of when government bonds fall due. The release does not give the government’s reasons, and this article does not guess them.
The exchange is broadly cash neutral. Cash moves only for the net accrued interest (interest earned but not yet paid) on the two bonds, plus a small amount from rounding.
If you hold bonds through a mutual fund or invest through a bank, this auction does not require anything from you. You can use the Compound Interest Calculator to see how interest builds up over long periods.
Background
The switch ratio is the source price divided by the destination price, rounded to 8 decimal places. The destination amount equals the allotted source face value multiplied by this ratio, rounded down to the nearest ₹10,000. The leftover odd amount is notionally allotted and bought back at the quoted destination price, with cash paid for it.
The RBI gives an illustration: ₹10 crore of a source bond at ₹97.50 against a destination at ₹99.20 gives a ratio of 0.98286290. The destination face value before rounding is ₹9,82,86,290, and ₹9,82,80,000 is issued. The odd ₹6,290 is settled for ₹6,240 in cash.
For other recent RBI market operations, see our report on the ₹25,000 crore OMO bond sale.
