Executive Summary:
The Government of India is reissuing four dated securities for a total notified amount of Rs 15,000 crore through price-based auctions conducted by the Reserve Bank of India (RBI) at Mumbai. Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system on July 08, 2016. Payment by successful bidders is due on July 11, 2016.
Key Points / Main Content:
* **Auction Details:**
* Four Government of India (GoI) dated securities will be reissued.
* The total notified amount is Rs 15,000 crore.
* Auctions are price-based using the multiple price method.
* RBI Mumbai will conduct the auctions.
* Auction date: July 08, 2016; Settlement date: July 11, 2016.
* **Bidding Process:**
* Minimum investment: Rs.10,000 (nominal) and in multiples thereof.
* Bids must be submitted electronically on the RBI's e-Kuber system.
* Physical bids are not accepted except in extraordinary circumstances.
* Non-competitive bids: 10:30 a.m. - 11:30 a.m.
* Competitive bids: 10:30 a.m. - 12:00 noon.
* Individuals can submit multiple competitive bids, but the aggregate amount should not exceed the notified amount.
* RBI determines the minimum acceptable price and can reject bids.
* **Non-Competitive Bidding:**
* 5% of the notified amount is reserved for non-competitive bidding.
* Eligible individuals and institutions can participate.
* Banks/PDs submit consolidated non-competitive bids on behalf of their constituents.
* Allotment is at the weighted average yield/price.
* **Post-Auction:**
* Auction results will be announced on July 08, 2016.
* Successful bidders must pay on July 11, 2016.
* 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.
* Stocks are eligible for When Issued trading between July 05, 2016 and July 08, 2016.
* **Security Details:**
* 7.80 GS 2021 will be repaid on April 11, 2021.
* 7.59 GS 2029 will be repaid on March 20, 2029.
* 7.73 GS 2034 will be repaid on December 19, 2034.
* 8.13 GS 2045 will be repaid on June 22, 2045.
Impact Analysis:
* **Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:**
* *Impact:* Must participate in the auction process if they wish to acquire the reissued government securities. They must also facilitate non-competitive bidding for their constituents.
* *Action Required:* Submit competitive and/or non-competitive bids electronically via the RBI's e-Kuber system by the specified deadlines. Ensure payment by July 11, 2016, if successful.
* **Investors (Individuals and Institutions):**
* *Impact:* Have the opportunity to invest in government securities through competitive or non-competitive bidding.
* *Action Required:* Place orders with their bank or PD for non-competitive bids. Submit competitive bids through their bank or PD, ensuring bids are within the notified amount limits.
Key Entities Referenced
Reserve Bank of India: 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: Entities eligible to participate in the auction of Government of India dated securities.
All State Cooperative Banks: Entities eligible to participate in the auction of Government of India dated securities.
All Scheduled Primary Urban Cooperative Banks: Entities eligible to participate in the auction of Government of India dated securities.
All Financial Institutions: Entities eligible to participate in the auction of Government of India dated securities.
All Primary Dealers: Entities eligible to participate in the auction of Government of India dated securities.
7.80 GS 2021: One of the Government of India dated securities being reissued.
RBI/2016-17/1
Ref. No. IDMD/11/08.02.032/2016-17 July 04, 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 7.80% GS 2021 3,000
July 04, 2016
4(3)-W&M/2016 (i)dated
2 7.59% GS 2029 7,000
July 04, 2016 July 08, 2016 July 11, 2016
(Friday) (Monday)
4(3)-W&M/2016(ii) dated
3 7.73% GS 2034 2,000
July 04, 2016
4(3)-W&M/2016(iii)
4 8.13% GS 2045 3,000
dated July 04, 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 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 July
08, 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 July 08, 2016 and payment by successful
bidders will be on July 11, 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 April 11, 2021; March 20, 2029; December
19, 2034; June 22, 01,2045 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period July 05, 2016– July
08, 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.