Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of ₹12,000 crore. The auction, conducted by RBI Mumbai, is price-based using a multiple price method. Bids must be submitted electronically via the RBI Core Banking Solution (E-Kuber) on November 22, 2018, with settlement on November 26, 2018.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued.
* The total notified amount for the auction is ₹12,000 crore.
* GoI can retain additional subscriptions up to ₹1,000 crore against any one or more securities.
* The auction is price-based, using a multiple price method.
* RBI Mumbai will conduct the auctions.
Bidding Process:
* Minimum bid amount is ₹10,000 nominal, in multiples of ₹10,000.
* Up to 5% of the notified amount will be allotted to eligible individuals/institutions under the Non-Competitive Bidding Facility.
* Banks/PDs must submit a single consolidated non-competitive bid for their constituents via E-Kuber.
* Both competitive and non-competitive bids must be submitted electronically via E-Kuber.
* Non-competitive bids: 11:00 a.m. to 12:00 noon on Nov 22, 2018.
* Competitive bids: 11:00 a.m. to 12:30 p.m. on Nov 22, 2018.
* Physical bids are not accepted except in extraordinary circumstances.
* The aggregate amount of bids by a person should not exceed the notified amount.
* RBI will determine the minimum price for accepted bids and may reject bids.
* RBI has the discretion to accept or reject any or all bids.
Settlement and Issuance:
* Auction results will be announced on November 22, 2018 (Thursday).
* Payment by successful bidders is due on November 26, 2018 (Monday).
* Government Stocks will be issued via Subsidiary General Ledger Account (SGL) or Stock Certificate.
* Interest will be paid half-yearly.
* The Stocks will be repaid at par on Feb 15, 2027; Jan 08, 2028; Aug 10, 2034; and Jun 22, 2045 respectively.
* The Stocks qualify for ready forward facility.
* The Stocks are eligible for When Issued trading from Nov 19 - Nov 22, 2018, as per RBI guidelines.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
Impact: These entities can participate in the auction of Government of India dated securities. They need to manage their bids and settlements according to the specified terms and timelines. They are also responsible for submitting non-competitive bids on behalf of their constituents.
Action Required: Submit competitive and non-competitive bids electronically via the E-Kuber system within the specified timeframes. Ensure compliance with all terms and conditions outlined in the notification and related guidelines.
Investors (Individuals and Institutions):
Impact: Eligible individuals and institutions can participate in the auction through the Non-Competitive Bidding Facility.
Action Required: Submit firm orders to their bank or PD to facilitate a consolidated non-competitive bid on their behalf.
Successful Bidders:
Impact: Successful bidders will acquire Government Stocks and receive interest payments.
Action Required: Make payment by the specified settlement date (November 26, 2018) to receive the allocated Government Stocks.
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 purchases.
Government of India: The issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: One of the entities to whom the notification is addressed.
All State Cooperative Banks: One of the entities to whom the notification is addressed.
All Scheduled Primary Urban Cooperative Banks: One of the entities to whom the notification is addressed.
All Financial Institutions: One of the entities to whom the notification is addressed.
All Primary Dealers: One of the entities to whom the notification is addressed.
Mumbai: City in Maharashtra, where the Reserve Bank of India will conduct the auctions.
RBI/2018-19/77
Ref.No.IDMD/1239/08.02.032/2018-19 November 16, 2018
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 a notified amount of
`12,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in ` crore)
1 8.24% GS 2027 3,000
2 7.17% GS 2028 4,000 F.No.4(6) W&M/2018 November November
dated 22, 2018 26, 2018
3 7.50% GS 2034 2,000 Nov 16, 2018 (Thursday) (Monday)
4 8.13% GS 2045 3,000
Total 12,000
Subject to the limit of `12000 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 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(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 Facilityin 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 Nov 22, 2018.
Bids in physical form will not be accepted except in extraordinary circumstances. The non-
competitive bids should be submitted between 11.00 a.m. and 12.00 noon. and the competitive
bids should be submitted between 11.00 a.m. and 12.30 p.m.
(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 Nov 22, 2018 (Thursday) and payment by
successful bidders will be on Nov 26, 2018 (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 Feb 15, 2027; Jan 08, 2028; Aug 10,
2034; and Jun 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 Nov 19 - Nov 22, 2018
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
(Arvind Kumar)
General Manager