Executive Summary:
The Reserve Bank of India (RBI) announced the auction of five Government of India dated securities for a total notified amount of Rs. 12,000 crore. The auction will be conducted by the RBI in Mumbai on May 04, 2018, with settlement on May 07, 2018. Both competitive and non-competitive bids must be submitted electronically through the RBI's e-Kuber system.
Key Points / Main Content:
Auction Details:
* Five government securities will be auctioned/reissued, totaling Rs. 12,000 crore.
* GoI has the option to retain additional subscriptions up to Rs. 1,000 crore against any one or more securities.
* The auction for New GoI FRB 2031 will be spread based; other securities will be price-based using a multiple price method.
* Auctions will be conducted by the Reserve Bank of India in Mumbai.
Bidding Process:
* 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.
* Banks/PDs must submit a single consolidated non-competitive bid on behalf of their constituents via the e-Kuber system.
* Both competitive and non-competitive bids must be submitted electronically via e-Kuber on May 04, 2018.
* 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 will determine the minimum price for accepted bids and reserves the right to accept or reject any bid.
Settlement and Issuance:
* Auction results will be announced on May 04, 2018.
* Payment by successful bidders is due on May 07, 2018.
* Securities will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* Stocks qualify for ready forward facility and When Issued trading (May 02-04, 2018).
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 securities. They must adhere to the specified bidding process and timelines.
Action Required: Submit competitive and/or non-competitive bids electronically via the RBI's e-Kuber system by the specified deadlines. Ensure compliance with the terms and conditions outlined in the notifications.
Eligible Individuals and Institutions:
Impact: Can participate in the auction through the Non-Competitive Bidding Facility, with up to 5% of the notified amount reserved for this segment.
Action Required: Submit firm orders to their bank or PD to participate in the non-competitive bidding process.
Investors:
Impact: Can invest in Government Stocks with a minimum investment of Rs. 10,000.
Action Required: Investors can submit more than one competitive bid at different prices. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of Government of India dated securities.
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.
Mumbai, Maharashtra: The city where the Reserve Bank of India will conduct the auctions.
RBI/2017-18/167
Ref. No. IDMD/2754/08.02.032/2017-18 April 27, 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 (issue/re-issue) five dated securities for notified amount
of Rs. 12,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in Rs crore)
1 6.65% GS 2020 2,000
2 7.59% GS 2026 3,000 F.No.4(6)
May 04, 2018 May 07, 2018
W&M/2018
3 New GOI FRB 2031 3,000 (Friday) (Monday)
dated
4 6.57% GS 2033 1,000
April 27, 2018
5 7.06% GS 2046 3,000
Total 12,000
Subject to the limit of Rs 12000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to Rs 1000 Cr each against any one or more of the above securities.
The auction for New GoI FRB 2031 will be spread based and for other securities it 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 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 May 04, 2018.
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 May 04, 2018 (Friday) and payment by
successful bidders will be on May 07, 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 April 09, 2020; January 11, 2026; December
07, 2031; December 05, 2033 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 May 02 – May 04,
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