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, price-based using a multiple price method, will be conducted by the RBI in Mumbai. Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system on October 21, 2016, with payment by successful bidders due on October 24, 2016.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be auctioned.
* The total notified amount for the auction is Rs 15,000 crore.
* The auction is price-based and uses a multiple price method.
* The auctions will be conducted by the Reserve Bank of India at Mumbai.
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 and institutions under the Non-Competitive Bidding Facility.
* Banks/Primary Dealers (PDs) must submit a single consolidated non-competitive bid on behalf of all constituents in electronic format on the e-Kuber system.
* Both competitive and non-competitive bids must be submitted electronically on the e-Kuber system on October 21, 2016.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* Physical bids will not be accepted except 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.
* RBI has the discretion to accept or reject any or all bids.
Settlement and Issuance:
* Auction results will be announced on October 21, 2016.
* Payment by successful bidders is due on October 24, 2016.
* Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* The Stocks will qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading during the period October 18–October 21, 2016.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, Primary Dealers:
*Impact: These entities are directly involved in the auction process, potentially acquiring government securities and managing their portfolios.
*Action Required: Prepare and submit competitive and/or non-competitive bids through the RBI's e-Kuber system according to the specified timelines and procedures.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
*Impact: They have the opportunity to acquire a portion of the government securities through the non-competitive bidding process.
*Action Required: Submit firm orders to their bank or PD for consolidated non-competitive bidding.
Investors:
*Impact: Can invest in government securities through competitive bidding.
*Action Required: Submit bids electronically on the e-Kuber system, adhering to the specified amounts and deadlines.
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: Entities eligible to participate in the auction of government securities.
All State Cooperative Banks: Entities eligible to participate in the auction of government securities.
All Scheduled Primary Urban Cooperative Banks: Entities eligible to participate in the auction of government securities.
All Financial Institutions: Entities eligible to participate in the auction of government securities.
All Primary Dealers: Entities eligible to participate in the auction of government securities.
Mumbai, Maharashtra: Location where the Reserve Bank of India will conduct the auctions.
RBI/2016-17/85
Ref. No. IDMD/850/08.02.032/2016-17 October 17, 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 15,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in Rs crore)
3,000 4(2)-W&M/2016 dated
1 7.35% GS 2024
October 17, 2016.
7,000 4(2)-W&M/2016(i) dated
2 7.61% GS 2030
October 17, 2016.
October 21, October 24,
2016 2016
7.50% GS 2034 2,000 4(2)-W&M/2016(ii) dated
3 (Friday) (Monday)
October 17, 2016.
3,000 4(2)-W&M/2016(iii) dated
4 7.06% GS 2046
October 17, 2016.
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 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 PDwill 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
October 21, 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 October 21, 2016 and payment by
successful bidders will be on October 24, 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 June 22, 2024; May 09, 2030; August 10,
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 October 18-October
21, 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