Executive Summary:
The Reserve Bank of India (RBI) announced the auction of four Government of India dated securities for a notified amount of Rs 14,000 crore. The auction will be price-based using a multiple price method, conducted by the RBI in Mumbai. Bids must be submitted electronically through the RBI's e-Kuber system by January 29, 2016, and payment by successful bidders is due on February 01, 2016.
Key Points / Main Content:
* **Auction Details:**
* Four Government of India dated securities will be reissued.
* The total notified amount is Rs 14,000 crore.
* Securities include: 7.35 GS 2024, 7.59 GS 2029, 8.24 GS 2033, and 8.13 GS 2045.
* The auction date is January 29, 2016, with settlement on February 01, 2016.
* **Bidding Process:**
* The auction is price-based using the multiple price method.
* Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system.
* Non-competitive bids are due between 10:30 a.m. and 11:30 a.m.
* Competitive bids are due between 10:30 a.m. and 12:00 noon.
* Physical bids will not be accepted except in extraordinary circumstances.
* The minimum bid amount is Rs.10,000 nominal and in multiples of Rs 10,000 thereafter.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
* **Allotment and Payment:**
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions under the Non-Competitive Bidding Facility.
* Allotment under the non-competitive segment will be at the weighted average rate/yield.
* The auction results will be announced on January 29, 2016.
* Payment by successful bidders is due on February 01, 2016.
* **Other Key Features:**
* Government Stocks will be issued in SGL accounts or Stock Certificates.
* Interest will be paid half-yearly.
* The stocks will be repaid at par on their respective maturity dates: June 22, 2024; March 20, 2029; November 10, 2033; June 22, 2045.
* The stocks qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading during the period January 25, 2016 January 29, 2016.
Impact Analysis:
Scheduled Commercial Banks:
* Impact: Banks can participate in the auction to acquire government securities for their portfolios and on behalf of their constituents. They must submit bids electronically via e-Kuber. Banks are also responsible for submitting consolidated noncompetitive bids on behalf of their constituents.
* Action Required: Submit competitive and non-competitive bids electronically via e-Kuber by the specified deadlines. Ensure compliance with the terms and conditions outlined in the notifications.
State Cooperative Banks:
* Impact: State Cooperative Banks can participate in the auction to acquire government securities for their portfolios. They must submit bids electronically via e-Kuber.
* Action Required: Submit competitive and non-competitive bids electronically via e-Kuber by the specified deadlines. Ensure compliance with the terms and conditions outlined in the notifications.
Scheduled Primary Urban Cooperative Banks:
* Impact: Scheduled Primary Urban Cooperative Banks can participate in the auction to acquire government securities for their portfolios. They must submit bids electronically via e-Kuber.
* Action Required: Submit competitive and non-competitive bids electronically via e-Kuber by the specified deadlines. Ensure compliance with the terms and conditions outlined in the notifications.
Financial Institutions:
* Impact: Financial Institutions can participate in the auction to acquire government securities for their portfolios and on behalf of their constituents. They must submit bids electronically via e-Kuber.
* Action Required: Submit competitive and non-competitive bids electronically via e-Kuber by the specified deadlines. Ensure compliance with the terms and conditions outlined in the notifications.
Primary Dealers:
* Impact: Primary Dealers can participate in the auction to acquire government securities for their portfolios and on behalf of their constituents. They must submit bids electronically via e-Kuber. Pds are also responsible for submitting consolidated noncompetitive bids on behalf of their constituents.
* Action Required: Submit competitive and non-competitive bids electronically via e-Kuber by the specified deadlines. Ensure compliance with the terms and conditions outlined in the notifications.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of government securities and regulating the financial system.
Government of India: The issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: A category of banks eligible to participate in the auction.
All State Cooperative Banks: A category of banks eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: A category of banks eligible to participate in the auction.
All Financial Institutions: An entity eligible to participate in the auction.
All Primary Dealers: An entity eligible to participate in the auction.
Mumbai, Maharashtra: The location where the Reserve Bank of India will conduct the auctions.
RBI/2015-16/301
Ref. No. IDMD/1640/08.02.032/2015-16 January 22, 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
14,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Date Settlement
No Amount (in date
Rs crore)
4(2)-W&M/2015 dated
1 7.35% GS 2024 2,000
January 22, 2016
4(2)-W&M/2015
2 7.59% GS 2029 6,000 (ii)dated
January 29, February
January 22, 2016
2016 (Friday) 01, 2016
4(2)-W&M/2015(ii)
3 8.24% GS 2033 3,000 (Monday)
dated January 22, 2016
4(2)-W&M/2015(iii)
4 8.13% GS 2045 3,000 dated
January 22, 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 firmorders 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
January 29, 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 January 29, 2016 and payment by
successful bidders will be on February 01, 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; March 20, 2029;
November 10, 2033; 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 January 25, 2016–
January 29, 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
(P K Pati)
General Manager