Executive Summary:
The Reserve Bank of India announces the auction of four Government of India dated securities for a total notified amount of Rs 15,000 crore. The auctions will be yield-based for the new security and price-based for the existing securities. Bids must be submitted electronically via the RBI's e-Kuber system on May 6, 2016, and payment by successful bidders is due on May 9, 2016.
Key Points / Main Content:
* **Auction Details:**
* Four Government of India dated securities will be auctioned.
* Total notified amount: Rs 15,000 crore.
* Auction type: Yield-based for new security, price-based for existing securities, using multiple price method.
* Auction conducted by: Reserve Bank of India, Mumbai.
* **Securities Details:**
* 7.35% GS 2024: Rs 3,000 crore
* NI GS 2030: Rs 8,000 crore
* 7.73% GS 2034: Rs 2,000 crore
* 8.13% GS 2045: Rs 2,000 crore
* **Bidding Process:**
* Minimum bid amount: Rs 10,000 nominal and in multiples thereof.
* Up to 5% of the notified amount is allotted to eligible individuals/institutions under the Non-Competitive Bidding Facility.
* Single consolidated non-competitive bid to be submitted by banks/PDs on behalf of constituents via e-Kuber.
* Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system.
* Non-competitive bids: 10:30 a.m. - 11:30 a.m. on May 6, 2016.
* Competitive bids: 10:30 a.m. - 12:00 noon on May 6, 2016.
* Physical bids are not accepted except in extraordinary circumstances.
* The aggregate amount of bids submitted by a person should not exceed the notified amount of the auction.
* **Auction Outcome and Settlement:**
* Auction results will be announced on May 6, 2016.
* Payment by successful bidders is due on May 9, 2016.
* Government Stocks will be issued via SGL account or Stock Certificate.
* Interest is paid half-yearly.
* Repayment at par: June 22, 2024; May 9, 2030; December 19, 2034; and June 22, 2045 respectively.
* **Other Details:**
* Stocks qualify for the ready forward facility.
* Stocks are eligible for When Issued trading between May 3, 2016, and May 9, 2016.
Impact Analysis:
* **Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:**
* Impact: They can participate in the auction of Government of India dated securities. They need to submit bids on behalf of themselves and their constituents. Allotment under the noncompetitive segment to the bank or PD will be at the weighted average rate of yield/price.
* Action Required: Submit competitive and non-competitive bids electronically via the RBI's e-Kuber system by the specified deadlines.
* **Investors (Individuals and Institutions):**
* Impact: They can invest in Government of India dated securities through competitive and non-competitive bidding.
* Action Required: Submit bids through eligible banks or Primary Dealers by providing firm orders.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of government 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 financial institutions eligible to participate in the auction.
All Primary Dealers: A category of financial institutions eligible to participate in the auction.
7.35 GS 2024: One of the Government of India dated securities being offered in the auction, maturing in 2024 with a coupon rate of 7.35%.
RBI/2015-16/389
Ref. No. IDMD/2465/08.02.032/2015-16 May 02, 2016
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 (issue/re-issue) four dated securities for notified
amount of Rs 15,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in Rs crore)
4(3)-W&M/2016 dated
1 7.35% GS 2024 3,000
May 2, 2016
4(3)-W&M/2016(i)dated
2 NI GS 2030 8,000
May 2, 2016 May 06, 2016 May 9, 2016
(Friday) (Monday)
4(3)W&M/2016(ii)dated
3 7.73% GS 2034 2,000
May 2, 2016.
4(3)-W&M/2016(iii) dated
4 8.13% GS 2045 2,000
May 2, 2016
Total 15,000
The auction for securities will be yield based (for the new security) /price based (for other
three existing securities) 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 (13)–W&M/2008, dated October 8, 2008
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 Rs.10,000/- (nominal) and in multiples
of Rs 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 May
6, 2016. Bids in physical form will not be accepted except in extraordinary circumstances. 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.
(iv) An investor can submit more than one competitive bid at different prices 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.
(v) 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.
(vi) The result of the auctions will be announced on May 6, 2016 and payment by successful
bidders will be on May 9, 2016 (Monday).
(vii) 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.
(viii) The Government Stocks will be repaid at par on June 22, 2024; May 9, 2030; December
19, 2034 and June 22, 2045 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period May 3, 2016 – May
9, 2016 in accordance with guidelines on ‘When Issued’ transactions in Central Government
Securities issued by Reserve Bank of India vide circular No.RBI/2006-07/178 dated November
16, 2006 as amended from time to time.
Yours faithfully
Sd/-
(P K Pati)
General Manager