The central government will sell 50-year bonds for the first time to meet demand for long-dated securities from the country’s life insurance and pension fund sectors.
This comes as a major development in the country’s financial sector as a rapidly growing middle class seeks long-term financial security and retirement planning through such investments.
The new 50-year bonds announced in the borrowing plan released by the Reserve Bank of India on Tuesday will add to the 30-year and 40-year tenor bonds currently offered.
“Investor demand has strengthened, supported by the expansion of the formal sector, with households allocating a higher share of financial savings to life insurance, pensions and provident funds,” said Gaura Sen Gupta, Economist, IDFC First Bank.
The government plans to sell Rs 30,000 crore worth of 50-year bonds between October and February.
The Center is sticking to its borrowing plan of Rs 6.55 lakh crore for the second half of the current financial year – or 42.45 percent of gross market borrowing of Rs 15.43 lakh crore for the whole year.
