**Executive Summary:**
The Government of India announces the sale/reissue of Floating Rate Bonds 2024 for an aggregate amount of 2,000 crore nominal. The sale will occur via auction conducted by the Reserve Bank of India (RBI) on December 23, 2016. Payment by successful bidders will be on December 26, 2016, which is the date of reissue. The bonds have a tenure of eight years, with repayment at par on November 07, 2024.
**Key Points / Main Content:**
* **Bond Details:**
* Bonds are Floating Rate Bonds 2024.
* Aggregate amount: 2,000 crore nominal.
* Tenure: Eight years, commencing from November 07, 2016.
* Repayment: At par on November 07, 2024.
* **Auction Details:**
* Conducted by: Reserve Bank of India, Mumbai Office.
* Date: December 23, 2016.
* 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. - 11:30 a.m. on December 23, 2016.
* Competitive bids: 10:30 a.m. - 12:00 noon on December 23, 2016.
* Allotment to Non-competitive Bidders: Up to 5% of the notified amount.
* **Payment & Interest:**
* Payment Date: December 26, 2016.
* Payment includes accrued interest from November 07, 2016, to December 25, 2016.
* Initial interest rate: 6.51% accruing from November 07, 2016, paid on May 07, 2017.
* Subsequent interest: Variable rate paid semi-annually on May 07 and November 07.
* Variable rate calculation: Average of implicit yields of the last three 182-day Treasury Bill auctions.
* Alternative calculation if 182-day Treasury Bill auctions are discontinued: 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.
* **Trading:**
* Eligible for "When Issued" trading as per RBI guidelines.
**Impact Analysis**
* **Reserve Bank of India (RBI):**
* *Impact:* Responsible for conducting the auction and announcing results.
* *Action Required:* Conduct the auction on December 23, 2016, display results, and announce semi-annual interest rates.
* **Bidders (Individuals and Institutions):**
* *Impact:* Opportunity to purchase/reissue Floating Rate Bonds 2024.
* *Action Required:* Submit bids electronically on the e-Kuber system within the specified timeframes on December 23, 2016, and make payment by December 26, 2016, if successful.
* **Government of India:**
* *Impact:* Raises funds through the sale/reissue of bonds.
* *Action Required:* Monitor the auction process.
* **Potential Investors (Individuals and Institutions):**
* *Impact:* Can invest in government bonds with floating interest rates.
* *Action Required:* Evaluate the terms of the bonds and participate in the auction if interested.
Key Entities Referenced
Floating Rate Bonds: Government of India bonds being reissued, with interest rates that vary over time.
Reserve Bank of India: The central bank of India, responsible for conducting the auction and displaying the results.
Mumbai Office, Fort, Mumbai: The specific branch office of the Reserve Bank of India where the auction is conducted and results are displayed, located in Maharashtra State.
General Notification F. No. 4 13WM2008, dated October 8, 2008: A previously issued government notification providing the general terms and conditions for bond sales.
Government of India 182 day Treasury Bills: Short-term debt instruments used to determine the variable coupon rate for the Floating Rate Bonds.
EKuber system: The Reserve Bank of India Core Banking Solution system used for submitting bids in electronic format.
Prashant Goyal: Joint Secretary to the Government of India, signing the notification.
Ministry of Finance Department of Economic Affairs Budget Division: The department and division within the Indian government responsible for issuing the notification.
Government of India
Ministry of Finance
Department of Economic Affairs
Budget Division
New Delhi, dated December 19, 2016
NOTIFICATION
Auction for Sale (Re-issue) of Government of India Floating Rate Bonds 2024
F. No.4 (3) W&M/2016: Government of India hereby notifies sale (re-issue) of Floating Rate Bonds
(hereinafter called 'the Bonds') for an aggregate amount of ` 2,000 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
December 23, 2016. Bids for the auction should be submitted in electronic format on the Reserve Bank
of India Core Banking Solution (E-Kuber) system on December 23, 2016. 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
December 23, 2016. The payment by successful bidders will be on December 26, 2016. 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 original issue i.e., November 07, 2016 to December 25, 2016.
Interest
8. (i) Interest at a rate of 6.51% will accrue from November 07, 2016 (date of original issue) and will be
paid on May 07, 2017. For the subsequent periods, the interest at a variable rate will be paid every half-
yearly on May 07 and November 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