Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of Rs 14,000 crore. The auction, conducted by the RBI in Mumbai, is price-based using a multiple price method. Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system by August 26, 2016, with payment due on August 29, 2016.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued.
* The total notified amount for the securities is Rs 14,000 crore.
* The auction is price-based using a multiple price method.
* The Reserve Bank of India (RBI) in Mumbai will conduct the auctions.
Bidding Process:
* Minimum bid amount is Rs.10,000 nominal and in multiples of Rs 10,000 thereafter.
* Up to 5% of the notified amount will be allotted to eligible individuals/institutions under the Non-competitive Bidding Facility.
* Banks/Primary Dealers (PDs) must submit a single consolidated non-competitive bid electronically on behalf of all constituents.
* Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system.
* Physical bids are not accepted except in extraordinary circumstances.
* Non-competitive bids are due between 10:30 a.m. and 11:30 a.m. on August 26, 2016.
* Competitive bids are due between 10:30 a.m. and 12:00 noon on August 26, 2016.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
* The RBI will determine the minimum price for accepted bids and reserves the right to accept or reject any bid.
Settlement and Other Details:
* Auction results will be announced on August 26, 2016.
* Payment by successful bidders is due on August 29, 2016.
* Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* The stocks mature on December 15, 2023; January 11, 2026; August 10, 2034; October 26, 2055 respectively.
* The Stocks qualify for the ready forward facility.
* The Stocks are eligible for "When Issued" trading between August 23, 2016, and August 26, 2016.
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. They are subject to the rules and procedures outlined in the notification.
* Action Required: Submit competitive and/or non-competitive bids electronically via the RBI's e-Kuber system by the specified deadlines.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
* Impact: These entities have the opportunity to be allotted up to 5% of the notified amount of sale under the non-competitive bidding scheme.
* Action Required: Submit firm orders to their bank or PD in a timely manner so that the bank/PD can submit a consolidated non-competitive bid on their behalf.
Investors:
* Impact: Investors can submit more than one competitive bid at different prices.
* Action Required: Ensure that the aggregate amount of bids submitted does not exceed the notified amount of auction.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions and determining the minimum price for Government Stock purchases.
All Scheduled Commercial Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
All State Cooperative Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
All Scheduled Primary Urban Cooperative Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
All Financial Institutions: An entity eligible to participate in the auction of Government of India Dated Securities.
All Primary Dealers: An entity eligible to participate in the auction of Government of India Dated Securities.
Government of India Dated Securities: Securities being auctioned by the Government of India, with a notified amount of Rs 14,000 crore.
Mumbai, Maharashtra: City in India, location where the Reserve Bank of India will conduct the auctions.
RBI/2016-17/39
Ref.No.IDMD/397/08.02.032/2016-17 August 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:
Notified
Sr Settlement
Security Amount GoI Notification Auction Date
No date
(in Rs crore)
4(3)-W&M/2016 dated
1 7.68% GS 2023 2,000
August 22, 2016
4(3)-W&M/2016 (i)dated
2 7.59% GS 2026 8,000
August 22, 2016 August 26, 2016 August 29, 2016
4(3)-W&M/2016(ii) dated (Friday) (Monday)
3 7.50% GS 2034 2,000
August 22, 2016
4(3)-W&M/2016(iii) dated
4 7.72% GS 2055 2,000
August 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 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 August 26, 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 August 26, 2016 and payment by successful bidders
will be on August 29, 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 December 15, 2023; January 11, 2026; August
10, 2034; October 26, 2055 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period August 23, 2016– August 26,
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
(Chandan Kumar)
General Manager