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On what basis does Zerodha block money for the bids for G-secs?

When you place a bid for G-secs, we forward it to the exchanges, and the exchanges block the necessary funds. 

For T-bills - Rs 100 per unit (i.e a minimum of Rs 10000) will be blocked and the difference will be credited to your trading account.

For G-bonds - This reserve amount blocked is an approximate amount. It is based on estimated weighted average rate of all allotments to competitive bidders + accrued interest + Markup value (difference between lowest and highest bid)

In case the reserve amount blocked is in excess of the allotment price (weighted average price), the excess amount will be refunded to your trading account.

For more information, you refer to the following FAQs -