Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a total notified amount of Rs 15,000 crore. The auction will be price-based using a multiple price method and conducted by RBI Mumbai. Bids must be submitted electronically via the RBI Core Banking Solution (e-Kuber) on August 05, 2016, and payment by successful bidders is due on August 08, 2016.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued via auction.
* The total notified amount is Rs 15,000 crore.
* The auction is price-based using a multiple price method.
Bidding Process:
* Both competitive and non-competitive bids must be submitted electronically through the RBI's e-Kuber system.
* Physical bids are not accepted except in extraordinary circumstances.
* Non-competitive bids are due between 10:30 a.m. and 11:30 a.m. on August 05, 2016.
* Competitive bids are due between 10:30 a.m. and 12:00 noon on August 05, 2016.
* 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.
Issue and Settlement:
* The 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.
* Auction results will be announced on August 05, 2016.
* Payment by successful bidders is due on August 08, 2016.
* 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 June 22, 2024; May 09, 2030; December 19, 2034; June 22, 2045 respectively.
* The Stocks qualify for the ready forward facility.
* The Stocks are eligible for When Issued trading between August 02, 2016 and August 05, 2016.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
* Impact: Need to participate in the auction process if they wish to acquire the Government of India dated securities. They must adhere to the bidding guidelines and timelines.
* Action Required: Submit competitive and/or non-competitive bids electronically via the e-Kuber system by the specified deadlines on August 05, 2016, and ensure payment by August 08, 2016, if the bid is successful.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
* Impact: Opportunity to acquire Government Stocks through the non-competitive bidding process.
* Action Required: Submit firm orders to their bank or PD, who will then submit a single consolidated non-competitive bid on their behalf.
Investors:
* Impact: Can invest in Government Stocks.
* Action Required: Submit bids through the Reserve Bank of India Core Banking Solution EKuber system.
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 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 reissued, maturing in 2024, with a coupon rate of 7.35%.
RBI/2016-17/31
Ref. No. IDMD/230/08.02.032/2016-17 August 01, 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:
Notified
Sr Settlement
Security Amount GoI Notification Auction Date
No date
(in Rs crore)
4(3)-W&M/2016 dated
1 7.35% GS 2024 3,000
August 01, 2016
4(3)-W&M/2016 (i)dated
2 7.61% GS 2030 8,000
August 01, 2016
August 05, 2016 August 08, 2016
4(3)-W&M/2016(ii) dated (Friday) (Monday)
3 7.73% GS 2034 2,000
August 01, 2016
4(3)-W&M/2016(iii) dated
4 8.13% GS 2045 2,000
August 01, 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 CoreBanking 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 05, 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 05, 2016 and payment by successful
bidders will be on August 08, 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; December
19, 2034; 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 August 02, 2016–
August 05, 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