Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a total notified amount of Rs 15,000 crore. The auction, conducted by the RBI in Mumbai, is price-based using a multiple price method. Bids must be submitted electronically via the RBI’s e-Kuber system on May 5, 2017, and payment by successful bidders is due on May 8, 2017.
Key Points / Main Content:
Auction Details:
* Four government securities will be reissued: 6.84 GS 2022, 6.79 GS 2029, 6.57 GS 2033 and 7.72 GS 2055.
* The total notified amount for the auction is Rs 15,000 crore.
* The auction will be price-based using a multiple price method.
Bidding Process:
* Minimum investment 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.
* Both competitive and non-competitive bids must be submitted electronically via the RBI e-Kuber system on May 5, 2017.
* Non-competitive bids: 10:30 a.m. - 11:30 a.m.; Competitive bids: 10:30 a.m. - 12:00 noon.
* Physical bids are not accepted unless 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 reserves the right to accept or reject any bid.
Settlement and Issue:
* Auction results will be announced on May 5, 2017.
* Payment by successful bidders is due on May 8, 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 their respective maturity dates: December 19, 2022; December 26, 2029; December 5, 2033; and October 26, 2055.
Other Features:
* The Stocks qualify for the ready forward facility.
* The Stocks are eligible for When Issued trading between May 2 - May 5, 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 institutions are directly involved in the auction process and are required to submit bids on behalf of themselves and their constituents. They are also responsible for informing their constituents about the auction details and procedures.
Action Required: Prepare and submit competitive and non-competitive bids electronically through the RBI e-Kuber system within the specified timelines. Ensure compliance with all terms and conditions outlined in the notifications.
Eligible Individuals and Institutions (under Non-Competitive Bidding Facility):
Impact: These entities have the opportunity to participate in the auction through the non-competitive bidding process, allowing them to acquire government securities without directly competing on price.
Action Required: Submit firm orders to their bank or PD, who will then submit a consolidated non-competitive bid on their behalf.
Investors:
Impact: Investors can submit more than one competitive bid at different prices.
Action required: Investors should ensure that the aggregate amount of bids submitted does not exceed the notified amount of the 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.
Government of India: The issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: A category of financial institutions eligible to participate in the auction.
All State Cooperative Banks: A category of financial institutions eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: A category of financial institutions eligible to participate in the auction.
All Financial Institutions: A category of financial institutions eligible to participate in the auction.
All Primary Dealers: A category of financial institutions eligible to participate in the auction.
6.84 GS 2022: One of the Government of India dated securities being reissued, maturing in 2022.
RBI/2016-17/297
Ref. No. IDMD/2827/08.02.032/2016-17 April 28, 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 6.84% GS 2022 3,000
April 28, 2017.
4(7)-W&M/2017(i)
2 6.79% GS 2029 7,000
dated April 28, 2017. May 5, 2017 May 8, 2017
4(7)-W&M/2017(ii) (Friday) (Monday)
6.57% GS 2033
3 2,000
dated April 28, 2017.
4(7)-W&M/2017(iii)
4 7.72% GS 2055 3,000
dated April 28, 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 ordersreceived 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 May 5, 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 May 5, 2017 (Friday) and payment by
successful bidders will be on May 8, 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 December 19, 2022; December 26, 2029;
December 5, 2033, and 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 May 2- May 5, 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
(Latha Vishwanath)
General Manager