Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of Rs 15,000 crore. The auction will be price-based using a multiple price method and conducted by the RBI in Mumbai. Bids must be submitted electronically via the RBI Core Banking Solution (E-Kuber) on June 30, 2017, with payment by successful bidders due on July 3, 2017.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued via auction.
* The total notified amount for the auction is Rs 15,000 crore.
* The auction is price-based, using a multiple price method.
* The RBI in Mumbai will conduct the auctions.
Bidding Process:
* Minimum bid amount is Rs.10,000 nominal, in multiples of Rs 10,000.
* Up to 5% of the notified amount will be allotted to eligible individuals/institutions under the Non-Competitive Bidding Facility.
* Competitive and non-competitive bids must be submitted electronically through the RBI's E-Kuber system on June 30, 2017.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* Physical bids are not accepted unless under extraordinary circumstances.
* An investor can submit multiple competitive bids, but the total bid amount should not exceed the notified auction amount.
* RBI has the right to accept or reject any bid.
Auction Outcome and Settlement:
* Auction results will be announced on June 30, 2017.
* Payment by successful bidders is due on July 3, 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.
Other Information:
* The Stocks qualify for the ready forward facility.
* The Stocks are eligible for When Issued trading between June 27-30, 2017, 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.
* Action Required: Submit competitive and/or non-competitive bids electronically through the RBI's E-Kuber system within the specified timeframe on June 30, 2017, based on firm orders from constituents.
Eligible Individuals and Institutions:
* Impact: These entities can participate in the auction through the Non-Competitive Bidding Facility.
* Action Required: Submit firm orders to their bank or Primary Dealer (PD) to submit a consolidated non-competitive bid on their behalf.
Successful Bidders:
* Impact: They will be allotted Government Stocks.
* Action Required: Make payment for the allotted securities by July 3, 2017.
Key Entities Referenced
Scheduled Commercial Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
State Cooperative Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
Scheduled Primary Urban Cooperative Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
Financial Institutions: Entities eligible to participate in the auction of Government of India Dated Securities.
Primary Dealers: Entities eligible to participate in the auction of Government of India Dated Securities.
Government of India Dated Securities: Securities issued by the Government of India that are being auctioned.
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of Government of India Dated Securities.
Mumbai: City in Maharashtra, location where the Reserve Bank of India will conduct the auctions.
RBI/2016-17/328
Ref. No. IDMD/3082/08.02.032/2016-17 June 23, 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 Rs
15,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in Rs crore)
4(7)-W&M/2017 dated
1 GoI FRB 2024 3,000
June 23, 2017.
4(7)-W&M/2017(i)
2 6.79% GS 2027 8,000
dated June 23, 2017. June 30, 2017 July 3, 2017
4(7)-W&M/2017(ii) (Friday) (Monday)
7.73% GS 2034
3 2,000
dated June 23, 2017.
4(7)-W&M/2017(iii)
4 7.06% GS 2046 2,000
dated June 23, 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 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 June 30, 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 June 30, 2017 (Friday) and payment by
successful bidders will be on July 3, 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 June 27- June 30,
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
(Arun Bhagoliwal)
Deputy General Manager