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RBI’s Rs 25,000-Crore Switch Auction On March 2nd And Its Impact On Bond Markets, Government Debt Strategy | Explained
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RBI Switch Auction On March 2: The Reserve Bank of India will conduct a government securities switch auction worth Rs 25,000 crore on March 2 between 10:30 AM and 11:30 AM
In the latest exercise, all securities, having maturities in FY27, are being replaced with bonds maturing after FY32.
RBI Switch Auction On March 2: The Reserve Bank of India (RBI) will conduct a government securities switch auction worth Rs 25,000 crore on March 2 between 10:30 AM and 11:30 AM, with results to be declared the same day and settlement scheduled for March 4. The move marks the third such operation this month and is aimed at smoothing India’s future debt repayment profile.
What is a switch auction?
A switch auction is a debt management tool through which the government exchanges bonds that mature soon with bonds that mature later. Instead of repaying investors in cash when near-term securities mature, the government offers them longer-dated securities. This effectively postpones repayment obligations without increasing total debt.
In the latest exercise, all securities, having maturities in FY27, are being replaced with bonds maturing after FY32, according to RBI data.
Why is RBI conducting it now?
The key trigger is the heavy redemption pressure expected in FY27, when government securities worth about Rs 5.47 lakh crore are scheduled to mature. By replacing these with bonds maturing after FY32, the authorities are spreading repayment obligations across future years. This reduces refinancing risk and prevents sudden spikes in borrowing needs.
How does it help the government?
India has already budgeted gross market borrowing of Rs 17.2 lakh crore. Large redemptions in a single year would force the government either to borrow more or use fiscal resources for repayment. Switch auctions smooth this maturity profile, making debt servicing more predictable and fiscally manageable.
What has happened so far this month?
Before this latest announcement, the RBI conducted two switch auctions in which securities worth Rs 84,804 crore were bought back and replaced. The repeated use of this tool signals a proactive debt-management strategy rather than a reactive measure.
Why markets watch switch auctions closely
Bond investors track such operations because they affect liquidity, yield curves and supply of long-term securities. Extending maturities can reduce pressure on near-term yields while increasing supply at the long end, influencing pricing across the sovereign curve.
The broader takeaway
The latest switch auction is part of a deliberate strategy to manage India’s rising debt stock more efficiently. By pushing repayments further into the future and avoiding bunching of maturities, policymakers aim to maintain stability in government borrowing costs and ensure smoother fiscal operations in coming years.
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February 26, 2026, 11:11 IST
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