Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of ₹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 via the RBI Core Banking Solution (E-Kuber) system by August 11, 2017, with settlement on August 14, 2017.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued for a total notified amount of ₹15,000 crore.
* The securities include GoI FRB 2024, 6.79 GS 2027, 7.73 GS 2034 and 7.06 GS 2046.
* The auction will be price-based using the multiple price method.
Bidding Process:
* Minimum bid amount is ₹10,000 nominal and in multiples thereof.
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility.
* Both competitive and non-competitive bids must be submitted electronically via the RBI E-Kuber system on August 11, 2017.
* Non-competitive bids: 10:30 a.m. and 11:30 a.m.
* Competitive bids: 10:30 a.m. and 12:00 noon.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
* RBI has the discretion to accept or reject any or all bids.
Settlement and Other Details:
* Auction results will be announced on August 11, 2017.
* Payment by successful bidders is due on August 14, 2017.
* Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* The Stocks will be repaid at par on November 07, 2024; May 15, 2027; December 19, 2034, and October 10, 2046 respectively.
* The Stocks will qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading during the period August 8 – August 11, 2017.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
* Impact: Can participate in the auction of government securities.
* Action Required: Submit competitive and/or non-competitive bids electronically via the RBI E-Kuber system by the specified deadlines on August 11, 2017. Banks and PDs should submit a single consolidated noncompetitive bid on behalf of all its constituents.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
* Impact: Can be allotted up to 5% of the notified amount of sale.
* Action Required: Submit firm orders to their bank or PD, who will then submit a single consolidated noncompetitive bid on their behalf.
Investors:
* Impact: Can submit more than one competitive bid at different prices.
* Action Required: Submit bids electronically via the RBI E-Kuber system, ensuring the aggregate bid amount does not exceed the notified auction amount.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions.
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: An entity eligible to participate in the auction.
All Primary Dealers: An entity eligible to participate in the auction.
Government of India Dated Securities: Securities being auctioned by the Government of India.
General Notification F. No. 4 13WM2008: A notification issued by the Government of India containing terms and conditions related to the auctioned stocks.
RBI/2017-18/40
Ref.No.IDMD/318/08.02.032/2017-18 August 7, 2017
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 `
15,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in ` crore)
4(7)-W&M/2017 dated
1 GoI FRB 2024 3,000
August 7, 2017
4(7)-W&M/2017(i) dated
2 6.79% GS 2027 8,000
August 7, 2017.
August 11, August 14,
4(7)-W&M/2017(ii) dated 2017 (Friday) 2017 (Monday)
7.73% GS 2034
3 2,000
August 7, 2017.
4(7)-W&M/2017(iii) dated
4 7.06% GS 2046 2,000
August 7, 2017.
Total 15,000
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 ` 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 ordersreceived 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 August 11,
2017. 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 August 11, 2017 (Friday). and payment by
successful bidders will be on August 14, 2017 (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 November 07, 2024; May 15, 2027;
December 19, 2034, and October 10, 2046 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period August 8 - August
11, 2017, 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
(Latha Vishwanath)
General Manager