Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four reissued Government of India dated securities for a total notified amount of ₹12,000 crore. The auction will be price-based using a multiple price method, conducted by the RBI in Mumbai. Bids must be submitted electronically via the RBI's e-Kuber system by December 7, 2018, and payment by successful bidders is due on December 10, 2018.
Key Points / Main Content:
* **Auction Details:**
* Four Government of India dated securities will be reissued.
* Total notified amount: ₹12,000 crore.
* GoI can retain additional subscriptions up to ₹1,000 crore against any one or more securities.
* Auction type: Price-based using multiple price method.
* Conducted by: Reserve Bank of India, Mumbai.
* **Bidding Process:**
* Minimum investment: ₹10,000 (nominal) and in multiples thereof.
* 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 via e-Kuber on behalf of their constituents.
* Both competitive and non-competitive bids must be submitted electronically via e-Kuber.
* Physical bids are not accepted, except in extraordinary circumstances.
* Non-competitive bid submission: 10:30 a.m. to 11:30 a.m. on Dec 07, 2018.
* Competitive bid submission: 10:30 a.m. to 12:00 noon on Dec 07, 2018.
* Multiple competitive bids are allowed, but the aggregate bid amount should not exceed the notified amount.
* RBI determines the minimum acceptable price; bids below this price will be rejected.
* RBI has the discretion to accept or reject any/all bids.
* **Post-Auction:**
* Auction results will be announced on December 7, 2018 (Friday).
* Payment by successful bidders is due on December 10, 2018 (Monday).
* Securities will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid semi-annually.
* Repayment at par will occur on Feb 15, 2027; Jan 08, 2028; Aug 10, 2034; Oct. 26, 2055 respectively, for each security.
* The Stocks qualify for the ready forward facility.
* Eligible for "When Issued" trading between December 4-7, 2018, as per RBI guidelines.
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 Securities.
* Action Required: Submit competitive and/or non-competitive bids electronically through the RBI's e-Kuber system within the specified timelines.
* **Investors (Individuals and Institutions):**
* Impact: Eligible investors can participate in the auction through the non-competitive bidding facility.
* Action Required: Submit firm orders to their bank or PD to include in a consolidated non-competitive bid.
Key Entities Referenced
Reserve Bank of India: Central bank of India, responsible for conducting the auctions of Government of India dated securities.
Government of India: The issuer of dated securities being auctioned.
All Scheduled Commercial Banks: Entities eligible to participate in the auction.
All State Cooperative Banks: Entities eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: Entities eligible to participate in the auction.
All Financial Institutions: Entities eligible to participate in the auction.
All Primary Dealers: Entities eligible to participate in the auction.
Mumbai, Maharashtra: Location where the Reserve Bank of India will conduct the auctions.
RBI/2018-19/85
Ref.No.IDMD/1359/08.02.032/2018-19 December 03, 2018
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 a notified amount of
`12,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in ` crore)
1 8.24% GS 2027 3,000
2 7.17% GS 2028 4,000 F.No.4(6)
Dec 07, 2018 Dec 10, 2018
W&M/2018 dated
(Friday) (Monday)
3 7.50% GS 2034 2,000 Dec 03, 2018
4 7.72% GS 2055 3,000
Total 12,000
Subject to the limit of `12000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to `1000 Cr each against any one or more of the above securities.
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(2)–W&M/2018, dated March 27,
2018 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 `10,000/- (nominal) and in multiples of
`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 Facilityin 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 Dec 07, 2018.
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 Dec 07, 2018 (Friday) and payment by
successful bidders will be on Dec 10, 2018 (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 Feb 15, 2027; Jan 08, 2028; Aug 10,
2034; Oct. 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 Dec 04 - Dec 07, 2018
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
(Arvind Kumar)
General Manager