Executive Summary:
The Reserve Bank of India (RBI) announces the auction of five Government of India dated securities for a total notified amount of ₹16,000 crore. The auction will be price-based using a multiple price method and conducted by the RBI in Mumbai. Both competitive and non-competitive bids must be submitted electronically via the RBI’s e-Kuber system on October 18, 2019. Payment by successful bidders is due on October 22, 2019.
Key Points / Main Content:
* **Auction Details:**
* Five Government of India dated securities will be reissued via auction.
* The total notified amount is ₹16,000 crore, with an option for GoI to retain up to ₹1,000 crore additional subscription against any one or more securities.
* The auction is price-based, using a multiple price method.
* **Bidding Process:**
* Minimum bid amount is ₹10,000 nominal and in multiples of ₹10,000 thereafter.
* Up to 5% of the notified amount is reserved for non-competitive bidding.
* Competitive and non-competitive bids must be submitted electronically through the RBI’s e-Kuber system on October 18, 2019.
* Non-competitive bids: 11:30 a.m. and 12:00 noon
* Competitive bids: 11.30 a.m. and 12.30 pm.
* Physical bids are accepted only in the event of system failure.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
* **Auction Outcome and Settlement:**
* The RBI determines the minimum price for accepted bids.
* RBI has the discretion to accept or reject any bids.
* Auction results will be announced on October 18, 2019.
* Payment by successful bidders is due on October 22, 2019.
* Government Stocks will be issued by credit to Subsidiary General Ledger Account (SGL) or in the form of Stock Certificate.
* **Stock Features:**
* Interest on the Government Stock will be paid half-yearly.
* The Stocks will be repaid at par on July 15, 2021; Apr 8, 2026; Oct 07, 2029; Sep 15, 2039; Jun 17, 2059 respectively.
* The Stocks will qualify for Repurchase (Repo) transactions.
* The Stocks will be eligible for When Issued trading during the period October 15 – October 18, 2019.
Impact Analysis
* **Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:**
* Impact: These entities are eligible to participate in the auction of Government of India dated securities.
* Action Required: Submit competitive and/or non-competitive bids electronically through the RBI’s e-Kuber system within the specified timeframe on October 18, 2019, based on their investment strategies and client demand.
* **Investors (Individuals and Institutions):**
* Impact: Eligible investors can participate in the auction through the Non-Competitive Bidding Facility.
* Action Required: Submit firm orders to their banks or Primary Dealers (PDs) who will then submit a single consolidated non-competitive bid on their behalf.
* **Reserve Bank of India (RBI):**
* Impact: Oversees and conducts the auction process.
* Action Required: Conduct the auction, determine the minimum price, announce results, and facilitate the settlement process.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of Government of India dated securities.
Government of India: The issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: A category of financial institutions eligible to participate in the auction.
All State Cooperative Banks: A category of financial institutions eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: A category of financial institutions eligible to participate in the auction.
All Financial Institutions: A category of institutions eligible to participate in the auction.
All Primary Dealers: A category of financial institutions eligible to participate in the auction.
Mumbai, Maharashtra: City in India where the Reserve Bank of India will conduct the auctions.
RBI/2019-20/82
Ref.No.IDMD/1009/08.02.032/2019-20 October 14, 2019
All Scheduled Commercial Banks
All State Co-operative Banks/All Scheduled Primary
(Urban) Co-operative Banks/All Financial Institutions/
All Primary Dealers.
Dear Sir/Madam,
Auction of Government of India Dated Securities
Government of India has offered to sell (re-issue) five dated securities for a notified amount of
`16,000 crore as per the following details:
Notified
Sr Settlement
Security Amount GoI Notification Auction Date
No date
(in ` crore)
1 6.17% GS 2021 2,000
2 7.27% GS 2026 2,000
F.No.4(6)
October 18, October 22,
3 6.45% GS 2029 7,000 W&M/2019 dated
2019 (Friday) 2019 (Tuesday)
October 14, 2019
4 7.62% GS 2039 1,000
5 7.63% GS 2059 4,000
Total 16,000
Subject to the limit of `16000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to `1000 Cr each against any one or more of the above securities.
The auction be price based using multiple price method. The Reserve Bank of India at Mumbai
will conduct the auctions. The salient features of the auctions and the terms and conditions
governing the issue of the Stocks are given in the notifications (copies enclosed), which should be
read along with the General Notification F.No.4(2)–W&M/2018, dated March 27, 2018 issued by
Government of India.
2. We wish to draw your attention, in particular, to the following:
(i) The Stocks will be issued for a minimum amount of `10,000/- (nominal) and in multiples of
`10,000/- thereafter.
(ii) In all the auctions, Government Stock up to 5% of the notified amount of sale will be allotted to
the eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility in the
Auctions of Government Securities. Each bank or PD on the basis of firm orders received from
their constituents will submit a single consolidated non-competitive bid on behalf of all its
constituents in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber)
system. Allotment under the non-competitive segment to the bank or PD will be at the weighted
average rate of yield/price that will emerge in the auction on the basis of the competitive bidding.(iii) Both competitive and non-competitive bids for the auction should be submitted in electronic
format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on October 18,
2019. Bids in physical form will not be accepted except in extraordinary circumstances. The non-
competitive bids should be submitted between 11.30 a.m. and 12.00 noon and the competitive bids
should be submitted between 11.30 a.m. and 12.30 pm.
(iv) Only in the event of system failure, physical bids would be accepted. Such physical bids should
be submitted to the Public Debt Office (email; Phone no: 022-22632527, 022-22701299) in the
prescribed form obtainable from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx)
before the auction timing ends. In case of technical difficulties, Core Banking Operations Team
should be contacted (email; Phone no: 022-27595414, 022-27595666). For other auction related
difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).
(v) An investor can submit more than one competitive bids in electronic format on the Reserve
Bank of India Core Banking Solution (E-Kuber) system. However, the aggregate amount of bids
submitted by a person in an auction should not exceed the notified amount of auction.
(vi) On the basis of bids received, the Reserve Bank will determine the minimum price up to which
tenders for purchase of Government Stock will be accepted at the auctions. Bids quoted at rates
lower than the minimum price determined by the Reserve Bank of India will be rejected. Reserve
Bank of India will have the full discretion to accept or reject any or all bids either wholly or partially
without assigning any reason.
(vii) The result of the auctions will be announced on October 18, 2019 (Friday) and payment by
successful bidders will be on October 22, 2019 (Tuesday).
(viii) The Government Stocks will be issued by credit to Subsidiary General Ledger Account (SGL)
of parties maintaining such account with Reserve Bank of India or in the form of Stock Certificate.
Interest on the Government Stock will be paid half-yearly.
(ix) The Government Stocks will be repaid at par on July 15, 2021; Apr 8, 2026; Oct 07, 2029;
Sep 15, 2039; Jun 17, 2059 respectively.
(x) The Stocks will qualify for Repurchase transactions (Repo) in accordance with the Repurchase
transactions (Repo) Directions, 2018 as amended from time to time.
(xi) The Stocks will be eligible for “When Issued” trading during the period October 15 – October
18, 2019 in accordance with guidelines on ‘When Issued’ transactions in Central Government
Securities issued by Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018
as amended from time to time.
Yours faithfully
(Arvind Kumar)
General Manager