Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of Rs. 12,000 crore. The auction will be conducted by the RBI in Mumbai on April 13, 2018, with settlement on April 16, 2018. Both competitive and non-competitive bids must be submitted electronically through the RBI's e-Kuber system.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be auctioned, totaling Rs. 12,000 crore.
* GoI can retain additional subscription up to Rs 1000 Cr against any one or more of the securities.
* The auction is yield-based for the new security and price-based for others, using a multiple price method.
* The auction 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 is reserved for eligible individuals and institutions under the Scheme for Non-competitive Bidding.
* Competitive and non-competitive bids must be submitted electronically on the RBI's e-Kuber system on April 13, 2018.
* 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 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 will determine the minimum price for accepted bids and can accept or reject any bids.
* Auction results will be announced on April 13, 2018, with payment due on April 16, 2018.
Stock Issuance and Terms:
* Stocks will be issued in SGL accounts with RBI or as Stock Certificates.
* Interest will be paid half-yearly.
* Repayment at par occurs on April 16, 2023; September 17, 2031; 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 April 10 – April 13, 2018.
Impact Analysis:
All Scheduled Commercial Banks / All State Cooperative Banks/ All Scheduled Primary Urban Cooperative Banks / All Financial Institutions / All Primary Dealers
Impact: Eligible entities can participate in the auction of Government of India dated securities. Banks and Primary Dealers are responsible for submitting consolidated non-competitive bids on behalf of their constituents.
Action Required: Submit competitive and/or non-competitive bids electronically through the RBI's e-Kuber system within the specified timeframes on April 13, 2018, and ensure payment on April 16, 2018, for successful bids.
Key Entities Referenced
Scheduled Commercial Banks: All Scheduled Commercial Banks that are addressees of the policy.
State Cooperative Banks: All State Cooperative Banks that are addressees of the policy.
Primary Urban Cooperative Banks: All Scheduled Primary Urban Cooperative Banks that are addressees of the policy.
Financial Institutions: All Financial Institutions that are addressees of the policy.
Primary Dealers: All Primary Dealers that are addressees of the policy.
Government of India: The issuer of the dated securities being auctioned.
Reserve Bank of India: The central bank of India, responsible for conducting the auctions.
Arvind Kumar: General Manager at Reserve Bank of India
RBI/2017-18/159
Ref. No.IDMD/2584/08.02.032/2017-18 April 09, 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) four dated securities for notified amount
of Rs. 12,000 crore as per the following details:
Notified
Sr
Security Amount GoI Notification Auction Date Settlement date
No
(in Rs crore)
1 NI GS 2023 3,000
2 6.68% GS 2031 4,000
F.No.4(6)
April 13, 2018 April 16, 2018
W&M/2018 dated
3 7.73% GS 2034 2,000 (Friday) (Monday)
April 09, 2018
4 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 the new security will be yield 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 26, 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 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 April 13, 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 April 13, 2018 (Friday) and payment by
successful bidders will be on April 16, 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 16, 2023; September 17, 2031;
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 April 10 – April 13,
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