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 will be price-based using a multiple price method, conducted by the RBI in Mumbai. Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system on April 28, 2017. Payment by successful bidders is due on May 2, 2017.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities are offered for sale/reissue, totaling Rs 15,000 crore.
* Securities include: 6.84 GS 2022 (Rs 3,000 crore), 6.97 GS 2026 (Rs 7,000 crore), 7.73 GS 2034 (Rs 2,000 crore), and 7.06 GS 2046 (Rs 3,000 crore).
* The auction is price-based, using a multiple price method.
Bidding Process:
* Minimum bid amount: Rs.10,000 nominal and in multiples of Rs 10,000 thereafter.
* Up to 5% of the notified amount is allotted to eligible individuals/institutions under the Non-Competitive Bidding Facility.
* Banks/Primary Dealers (PDs) must submit a single, consolidated non-competitive bid for all constituents electronically via the e-Kuber system.
* Both competitive and non-competitive bids must be submitted electronically on the e-Kuber system. Physical bids are generally not accepted.
* 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, and bids below this price will be rejected.
* RBI has the discretion to accept or reject bids.
Settlement and Issuance:
* Auction results will be announced on April 28, 2017.
* Payment by successful bidders is due on May 2, 2017.
* 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: December 19, 2022; September 6, 2026; December 19, 2034; October 10, 2046.
* Stocks qualify for the ready forward facility.
When Issued Trading:
* The Stocks will be eligible for When Issued trading during the period April 25 – April 28, 2017.
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 procedures outlined in the notification, including electronic bidding via the e-Kuber system, adherence to bidding timelines, and compliance with minimum bid amounts.
Action Required:
* Submit competitive and/or non-competitive bids electronically via the RBI's e-Kuber system by the specified deadlines on April 28, 2017.
* Ensure bids comply with the minimum amount and other requirements.
* Inform constituents about the auction details and facilitate their participation in the non-competitive bidding process.
* Arrange for payment by May 2, 2017, if bids are successful.
Investors (Individuals and Institutions):
Impact: Eligible individuals and institutions can participate in the auction through the non-competitive bidding facility. Allotment will be at the weighted average rate/yield.
Action Required:
* Submit firm orders to their bank or PD for participation in the non-competitive bidding process.
* Ensure sufficient funds are available for payment if their bids are successful through their bank/PD.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of Government of India dated securities.
Government of India: The issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: One of the entities to whom the notification is addressed and eligible to participate in the auction.
All State Cooperative Banks: One of the entities to whom the notification is addressed and eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: One of the entities to whom the notification is addressed and eligible to participate in the auction.
All Financial Institutions: One of the entities to whom the notification is addressed and eligible to participate in the auction.
All Primary Dealers: One of the entities to whom the notification is addressed and eligible to participate in the auction.
Mumbai, Maharashtra: Location where the Reserve Bank of India will conduct the auctions.
RBI/2016-17/291
Ref.No.IDMD/2782/08.02.032/2016-17 April 24, 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 (issue/re-issue) four dated securities for notified
amount of Rs 15,000 crore as per the following details:
Notified
Sr Settlement
Security Amount GoI Notification Auction Date
No date
(in Rs crore)
4(7)-W&M/2017 dated
1 6.84% GS 2022 3,000
April 24, 2017.
4(7)-W&M/2017 (i) dated
2 6.97% GS 2026 7,000
April 24, 2017. April 28, 2017 May 2, 2017
4(7)-W&M/2017 (ii) dated (Friday) (Tuesday)
7.73% GS 2034
3 2,000
April 24, 2017.
4(7)-W&M/2017 (iii) dated
4 7.06% GS 2046 3,000
April 24, 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 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
April 28, 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 April 28, 2017 (Friday) and payment by
successful bidders will be on May 2, 2017 (Tuesday).
(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; September 6, 2026;
December 19, 2034, and October 10, 2046 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period April 25 - April
28, 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
(Arun Bhagoliwal)
Deputy General Manager