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, price-based using a multiple price method, will be conducted by the RBI in Mumbai. Bids must be submitted electronically via the RBI's e-Kuber system by August 12, 2016, and payment by successful bidders is due on August 16, 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.
* The auction is price-based using the multiple price method.
* Auctions will be conducted by the Reserve Bank of India at Mumbai.
Bidding Process:
* Minimum amount for Stocks is Rs.10,000 nominal and in multiples of Rs 10,000 thereafter.
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions under the Non-Competitive Bidding Facility.
* Both competitive and non-competitive bids must be submitted electronically via the RBI e-Kuber system on August 12, 2016.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* Physical bids will not be accepted except in extraordinary circumstances.
* 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.
Result and Settlement:
* Auction results will be announced on August 12, 2016.
* Payment by successful bidders is due on August 16, 2016.
* Government Stocks will be issued via Subsidiary General Ledger Account (SGL) or Stock Certificate.
* Interest on Government Stock will be paid half-yearly.
* Government Stocks will be repaid at par on specific dates in 2023, 2026, 2034 and 2044.
Other Information:
* The Stocks qualify for the ready forward facility.
* The Stocks are eligible for When Issued trading between August 09, 2016 and August 12, 2016.
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. They are subject to the rules and guidelines outlined in the notification, including the electronic bidding process and the terms and conditions governing the issue of the stocks.
Action Required: Submit competitive and/or non-competitive bids electronically via the RBI e-Kuber system within the specified timeframes on August 12, 2016. Ensure payment by August 16, 2016, if the bid is successful.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
Impact: These entities can participate in the auction through the Non-Competitive Bidding Facility, with up to 5% of the notified amount reserved for them. Allotment will be at the weighted average rate/yield.
Action Required: Submit firm orders to their bank or Primary Dealer (PD).
Banks and Primary Dealers (PDs):
Impact: Banks and PDs must submit a single consolidated non-competitive bid on behalf of their constituents based on firm orders received. Allotment under the non-competitive segment will be at the weighted average rate/yield.
Action Required: Consolidate non-competitive bids from constituents and submit them electronically via the RBI e-Kuber system between 10:30 a.m. and 11:30 a.m. on August 12, 2016.
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 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: A category of institutions eligible to participate in the auction.
All Primary Dealers: A category of entities eligible to participate in the auction.
Mumbai, Maharashtra: The city where the Reserve Bank of India will conduct the auctions.
RBI/2016-17/35
Ref.No.IDMD/305/08.02.032/2016-17 August 08, 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 7.68% GS 2023 3,000
August 08, 2016
4(3)-W&M/2016 (i)dated
2 7.59% GS 2026 8,000
August 08, 2016 August 12, August 16,
2016 (Friday) 2016 (Tuesday)
4(3)-W&M/2016(ii) dated
3 7.50% GS 2034 2,000
August 08, 2016
4(3)-W&M/2016(iii)
4 8.17% GS 2044 2,000
dated August 08, 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 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 12, 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 August 12, 2016 and payment by successful
bidders will be on August 16, 2016 (Tuesday).
(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 December 15, 2023; January 11, 2026;
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 August 09, 2016 –
August 12, 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