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 RBI Mumbai, is price-based using a multiple price method. Both competitive and non-competitive bids must be submitted electronically via the RBI Core Banking Solution E-Kuber system on June 23, 2017, with settlement on June 27, 2017.
Key Points / Main Content:
Auction Details:
Four government securities are being re-issued via auction.
The total notified amount for the auction is Rs 15,000 crore.
The auction will be price-based using the multiple price method.
RBI Mumbai will conduct the auctions.
Bidding Process:
Both competitive and non-competitive bids must be submitted electronically on the RBI E-Kuber system. Physical bids are not accepted except in extraordinary circumstances.
Non-competitive bids are accepted between 10:30 a.m. and 11:30 a.m.
Competitive bids are accepted between 10:30 a.m. and 12:00 noon.
Investors can submit multiple competitive bids, but the total bid amount should not exceed the notified auction amount.
Government Stock up to 5% of the notified amount will be allotted to eligible individuals/institutions under the Non-Competitive Bidding Facility.
Allotment under the non-competitive segment will be at the weighted average rate of yield/price that emerges in the auction.
Issue and Settlement:
Minimum investment amount is Rs 10,000 nominal and in multiples thereof.
Auction results will be announced on June 23, 2017.
Payment by successful bidders is due on June 27, 2017.
Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
Interest will be paid half-yearly.
Security Features:
The Stocks will be repaid at par on their respective maturity dates: December 19, 2022; December 26, 2029; December 5, 2033; and November 28, 2051.
The Stocks qualify for the ready forward facility.
The Stocks are eligible for When Issued trading between June 20 and June 23, 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 entities can participate in the auction of government securities. They are subject to the terms and conditions outlined in the notification and general notification.
Action Required: Submit competitive and/or non-competitive bids electronically via the RBI E-Kuber system by the specified deadlines. Banks and PDs must submit a single consolidated noncompetitive bid on behalf of all their constituents based on firm orders received.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility
Impact: Can participate in the auction through the non-competitive bidding facility, with up to 5% of the notified amount allotted to them.
Action Required: Submit firm orders to their bank or Primary Dealer (PD) so that the bank/PD can submit a single consolidated non-competitive bid on their behalf.
Investors
Impact: Can invest in Government Stocks through competitive bidding.
Action Required: Submit bids electronically via the RBI 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 of Government of India dated securities.
Government of India: The issuer of the 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: City in Maharashtra, India, where the Reserve Bank of India will conduct the auctions.
RBI/2016-17/324
Ref. No. IDMD/3222/08.02.032/2016-17 June 19, 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:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in Rs crore)
4(7)-W&M/2017 dated
1 6.84% GS 2022
3,000 June 19, 2017.
7,000 4(7)-W&M/2017(i)
2 6.79% GS 2029
dated June 19, 2017.
June 23, 2017 June 27, 2017
4(7)-W&M/2017(ii)
3 6.57% GS 2033 (Friday) (Tuesday)
2,000 dated June 19, 2017.
4(7)-W&M/2017(iii)
4 6.62% GS 2051 3,000 dated June 19, 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 orders
received from their constituents will submit a single consolidated non-competitive bid on behalfof 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 June 23, 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 June 23, 2017 (Friday). and payment by
successful bidders will be on June 27, 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; December 26, 2029;
December 5, 2033, and November 28, 2051 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period June 20- June 23,
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