Executive Summary:
The Reserve Bank of India (RBI) announced the auction of four Government of India dated securities for a notified amount of Rs 15,000 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 through the RBI's e-Kuber system on July 15, 2016, with payment by successful bidders due on July 18, 2016.
Key Points / Main Content:
* **Auction Details:**
* Four Government of India dated securities will be reissued.
* The total notified amount is Rs 15,000 crore.
* Securities include: 7.35 GS 2024, 7.61 GS 2030, 7.50 GS 2034, and 8.17 GS 2044.
* The auction date is July 15, 2016, and the settlement date is July 18, 2016.
* **Bidding Process:**
* The auction will be price-based using a multiple price method.
* Minimum bid amount is Rs 10,000 nominal and in multiples thereof.
* Up to 5% of the notified amount will be allotted to eligible individuals/institutions under the Non-competitive Bidding Facility.
* Competitive and non-competitive bids must be submitted electronically on the RBI's e-Kuber system.
* Physical bids are not accepted except in extraordinary circumstances.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* RBI determines the minimum price and can accept or reject bids.
* **Settlement and Issuance:**
* Auction results will be announced on July 15, 2016.
* Payment by successful bidders is due on July 18, 2016.
* Securities will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* Repayment at par on June 22, 2024; May 09, 2030; August 10, 2034; December 01, 2044 respectively.
* **Other Features:**
* Stocks qualify for ready forward facility.
* Eligible for When Issued trading between July 12, 2016, and July 15, 2016.
Impact Analysis:
* **Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:**
* *Impact:* These entities are directly involved in the auction process, including submitting competitive and non-competitive bids on behalf of themselves and their constituents.
* *Action Required:* Submit electronic bids via the RBI's e-Kuber system within the specified timeframes on July 15, 2016. Coordinate non-competitive bids from constituents. Ensure payment on July 18, 2016, if bids are successful.
* **Investors (Individuals and Institutions):**
* *Impact:* Investors can participate in the auction through competitive and non-competitive bidding. Non-competitive bidding allows smaller participants to access government securities.
* *Action Required:* Submit bids through eligible banks or Primary Dealers. Ensure funds are available for payment on the settlement date if bids are successful.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions and determining the minimum price for Government Stock.
Government of India: The issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: A category of banks eligible to participate in the auction.
All State Cooperative Banks: A category of banks eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: A category of banks eligible to participate in the auction.
All Financial Institutions: Entities eligible to participate in the auction.
All Primary Dealers: Entities eligible to participate in the auction.
Mumbai, Maharashtra: City in India where the Reserve Bank of India will conduct the auctions.
RBI/2016-2017/12
Ref.No.IDMD/68/08.02.032/2016-17 July 11, 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 (re-issue) four dated securities for notified amount of Rs
15,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Date Settlement
No Amount date
(in Rs crore)
4(3)-W&M/2016 dated
1 7.35% GS 2024 3,000
July 11, 2016
4(3)-W&M/2016 (i)dated
2 7.61% GS 2030 8,000
July 11, 2016 July 15, 2016 July 18, 2016
(Friday) (Monday)
4(3)-W&M/2016(ii) dated
3 7.50% GS 2034 2,000
July 11, 2016
4(3)-W&M/2016(iii)
4 8.17% GS 2044 2,000
dated July 11, 2016
The auction for securities will 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 (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 behalfof 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 July
15, 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 July 15, 2016 and payment by successful
bidders will be on July 18, 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 09, 2030; August 10,
2034; December 01, 2044 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period July 12, 2016– July
15, 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
(Chandan Kumar)
General Manager