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, will be yield-based for the new security and price-based for others. Bids must be submitted electronically via the RBI Core Banking Solution (E-Kuber) on December 23, 2016, with payment by successful bidders due on December 26, 2016.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities are offered for sale/reissue, totaling Rs 14,000 crore.
* Securities include:
* 42WM2016 dated December 19, 2016, FRB 2024: Rs 2,000 crore
* 42WM2016i NI GS 2029 dated December 19, 2016: Rs 8,000 crore
* 6.57 GS 2033 dated December 19, 2016: Rs 2,000 crore
* 7.72 GS 2055 dated December 19, 2016: Rs 2,000 crore
* The auction for the new security will be yield based, and other securities will be price-based using a multiple price method.
Bidding Process:
* Minimum bid amount: Rs 10,000 nominal, in multiples of Rs 10,000.
* 5% of the notified amount is reserved for non-competitive bidding by eligible individuals and institutions.
* Both competitive and non-competitive bids must be submitted electronically via the RBI's E-Kuber system on December 23, 2016.
* Non-competitive bids: 10:30 a.m. and 11:30 a.m.
* Competitive bids: 10:30 a.m. and 12:00 noon.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
* RBI determines the minimum price for accepted bids and reserves the right to reject any or all bids.
Settlement and Other Details:
* Auction results will be announced on December 23, 2016.
* Payment by successful bidders is due on December 26, 2016.
* Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* Stocks will be repaid at par on their respective maturity dates.
* The Stocks will qualify for the ready forward facility.
* Stocks are eligible for When Issued trading from December 20-23, 2016.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
Impact:
* These entities are directly involved in the auction process for Government of India dated securities.
* They are subject to the rules and guidelines outlined in the notification, including bidding procedures, minimum bid amounts, and settlement dates.
Action Required:
* Submit competitive and non-competitive bids electronically via the RBI's E-Kuber system by the specified deadlines on December 23, 2016.
* Ensure payment for successful bids is made by December 26, 2016.
* Inform constituents about the non-competitive bidding facility.
Investors (Individuals and Institutions):
Impact:
* Eligible individuals and institutions can participate in the auction through the non-competitive bidding facility.
* They are subject to the terms and conditions governing the issue of Government Stocks.
Action Required:
* Submit firm orders to their bank or PD for non-competitive bidding.
Key Entities Referenced
All Primary Dealers: One of the entities to whom the circular is addressed.
Mumbai: The city where the Reserve Bank of India will conduct the auctions.
All Financial Institutions: One of the entities to whom the circular is addressed.
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: One of the entities to whom the circular is addressed.
All State Cooperative Banks: One of the entities to whom the circular is addressed.
All Scheduled Primary Urban Cooperative Banks: One of the entities to whom the circular is addressed.
RBI/2016-17/190
Ref. No. IDMD/1497/08.02.032/2016-17 December 19, 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 ( issue/re-issue) four dated securities for notified
amount of Rs 14,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in Rs crore)
2,000 4(2)-W&M/2016 dated
1 FRB 2024
December 19, 2016
8,000 4(2)-W&M/2016(i)
2 NI GS 2029 dated
December 19, 2016.
December December
23, 2016 26, 2016
2,000 4(2)-W&M/2016(ii)
(Friday) (Monday)
3
6.57% GS 2033
dated
December 19, 2016
2,000 4(2)-W&M/2016(iii)
4 7.72% GS 2055 dated
December 19, 2016
Total 14,000
The auction for the new security will be yield based and other 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
December 23, 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 December 23, 2016 and payment by
successful bidders will be on December 26, 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 November 07, 2024; December 26, 2029;
December 05, 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 December 20-
December 23, 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