**Executive Summary:**
The Government of India announces the sale/reissue of Floating Rate Bonds 2024 for an aggregate amount of 3,000 crore nominal. The sale will occur through a price-based auction conducted by the Reserve Bank of India (RBI) on August 11, 2017. Successful bidders must make payments by August 14, 2017. These bonds have an eight-year tenure and will be repaid on November 07, 2024, with interest paid semi-annually.
**Key Points / Main Content:**
* **Bonds Overview:**
* Bonds are Floating Rate Bonds 2024.
* Aggregate amount: 3,000 crore nominal.
* Tenure: Eight years, commencing from November 07, 2016.
* Repayment: At par on November 07, 2024.
* Interest is paid every half-year on November 07 and May 07.
* **Auction Details:**
* Conducted by: Reserve Bank of India, Mumbai.
* Date: August 11, 2017.
* Method: Price-based auction using multiple price auction method.
* Bidding: Electronic format on RBI's e-Kuber system.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* **Allotment to Non-Competitive Bidders:**
* Up to 5% of the notified amount is allotted to eligible individuals and institutions.
* As per the Scheme for Non-competitive Bidding Facility (Annex).
* **Payment and Issue:**
* Result of auction displayed by RBI on August 11, 2017.
* Payment by successful bidders: August 14, 2017.
* Payment includes accrued interest from May 07, 2017, to August 13, 2017.
* **Interest Rate:**
* Variable rate, paid semi-annually.
* Based on the average yield of the last three 182-day Treasury Bill auctions.
* If 182-day Treasury Bill auctions are discontinued, the coupon rate will be the average of Yield to Maturity (YTM) rates for six-month Government of India Securities.
* RBI will announce the interest rate before each semi-annual coupon period.
* **When Issued Trading:**
* The Stock will be eligible for When Issued trading in accordance with the guidelines issued by the Reserve Bank of India.
**Impact Analysis:**
**Eligible Individuals and Institutions (Non-Competitive Bidders):**
* *Impact:* Opportunity to invest in Government of India Floating Rate Bonds 2024 with a portion of the notified amount (up to 5%) reserved for them.
* *Action Required:* Submit non-competitive bids between 10.30 a.m. and 11.30 a.m. on August 11, 2017, according to the Scheme for Non-competitive Bidding Facility.
**Reserve Bank of India:**
* *Impact:* Responsible for conducting the auction, displaying results, and announcing interest rates.
* *Action Required:* Conduct the auction on August 11, 2017, display results on the same day, and announce the interest rate before each semi-annual coupon period.
**Successful Bidders:**
* *Impact:* Obligated to pay for the allotted bonds.
* *Action Required:* Make payment by August 14, 2017, including accrued interest.
**Government of India:**
* *Impact:* Issuer of the bonds, responsible for the terms and conditions.
* *Action Required:* Oversee the auction process and ensure adherence to the notification's terms.
Key Entities Referenced
Floating Rate Bonds 2024: Government of India's Floating Rate Bonds maturing in 2024, which are being reissued.
Reserve Bank of India: The central bank of India, responsible for conducting the auction and displaying the results.
Mumbai, Maharashtra: City in India where the Reserve Bank of India office is located and the auction is conducted.
General Notification F. No. 4 13WM2008: A previously issued notification by the Government of India containing general terms and conditions related to the bonds, dated October 8, 2008.
Scheme for Noncompetitive Bidding Facility in the Auctions of Government Securities: A scheme enclosed with the notification that allows eligible individuals and institutions to bid non-competitively for the bonds.
Government of India 182 day Treasury Bills: Short-term debt instruments of the Government of India, used as a reference for determining the variable coupon rate on the Floating Rate Bonds.
Prashant Goyal: Joint Secretary to the Government of India, who signed the notification.
Ministry of Finance Department of Economic Affairs Budget Division: The department and division under which this notification was issued
Government of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New Delhi, dated August 7, 2017
NOTIFICATION
Auction for Sale (Re-issue) of Government of India Floating Rate Bonds 2024
F. No.4 (7) W&M/2017: Government of India hereby notifies sale (re-issue) of Floating Rate Bonds 2024
(hereinafter called 'the Bonds') for an aggregate amount of ` 3,000 crore (nominal). The sale will be
subject to the terms and conditions spelt out in this notification (called ‘Specific Notification’) as also the
terms and conditions specified in the General Notification F. No. 4 (13)–W&M/2008, dated October 8,
2008 issued by Government of India.
Method of Issue
2. The Bonds will be sold through Reserve Bank of India, Mumbai Office, Fort, Mumbai- 400 001 in the
manner as prescribed in paragraph 5.1 of the General Notification F. No. 4 (13)–W&M/2008, dated
October 8, 2008 by a price based auction using multiple price auction method.
Allotment to Non-competitive Bidders
3. The Bonds up to 5% of the notified amount of the sale will be allotted to eligible individuals and
institutions as per the enclosed Scheme for Non-competitive Bidding Facility in the Auctions of
Government Securities (Annex).
Place and date of auction
4. The auction will be conducted by Reserve Bank of India, Mumbai Office, Fort, Mumbai-400 001 on
August 11, 2017. Bids for the auction should be submitted in electronic format on the Reserve Bank of
India Core Banking Solution (E-Kuber) system on August 11, 2017. The non-competitive bids should be
submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between
10.30 a.m. and 12.00 noon.
When Issued Trading
5. The Stock will be eligible for “When Issued” trading in accordance with the guidelines issued by the
Reserve Bank of India.
Tenure
6. The Floating Rate Bonds will be of eight years tenure commencing from November 07, 2016. The
Bonds will be repaid at par on November 07, 2024.
Date of issue and payment for the stock
7. The result of the auction shall be displayed by the Reserve Bank of India at its Fort, Mumbai Office on
August 11, 2017. The payment by successful bidders will be on August 14, 2017. i.e. the date of re-
issue. The payment for the Stock will include accrued interest on the nominal value of the Stock allotted in
the auction from the date of last coupon payment i.e. May 07, 2017 to August 13, 2017.
Interest
8. (i) The interest at a variable rate will be paid every half-yearly on November 07 and May 07.
(ii) The variable coupon rate for payment of interest on subsequent semi-annual period shall be the
average rate rounded off up to two decimal places, of the implicit yields at the cut-off prices of the last
three auctions of Government of India 182 day Treasury Bills, held up to the commencement of
the respective semi-annual coupon period. The implicit yields will be computed by reckoning 365 days
in a year.(iii) In the event of Government of India 182-day Treasury Bill auctions being discontinued during the
currency of the Bonds, the coupon rate will be the average of Yield to Maturity (YTM) rates prevailing for
six month Government of India Security/ies as on the last three non-reporting Fridays prior to the
commencement of the semi-annual coupon period. In case particular Friday/s is/are holiday/s, the yield to
maturity rates as on the previous working day shall be taken.
(iv) The rate of interest payable half yearly on the Bonds during the subsequent years shall be announced
by the Reserve Bank of India before the commencement of the relative semi-annual coupon period.
By Order of the President of India
(Prashant Goyal)
Joint Secretary to the Government of India