Executive Summary:
The Reserve Bank of India (RBI) announced the auction of four Government of India dated securities for a total notified amount of Rs 15,000 crore. The auction, price-based and using a multiple price method, will occur on July 22, 2016, with settlement on July 25, 2016. Both competitive and non-competitive bids must be submitted electronically through the RBI's EKuber system.
Key Points / Main Content:
Auction Details:
* Four government securities will be reissued: 7.68 GS 2023, 7.59 GS 2026, 7.73 GS 2034, and 8.13 GS 2045.
* The total notified amount for the auction is Rs 15,000 crore.
* The auction is price-based and uses a multiple price method.
* The RBI Mumbai will conduct the auctions.
Bidding Process:
* Minimum investment is Rs. 10,000 and in multiples thereof.
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions under the Non-Competitive Bidding Facility.
* Banks/PDs must submit a single consolidated non-competitive bid on behalf of their constituents via the EKuber system.
* Non-competitive bids should be submitted between 10:30 a.m. and 11:30 a.m. on July 22, 2016.
* Competitive bids should be submitted between 10:30 a.m. and 12:00 noon on July 22, 2016.
* 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.
Auction Outcome and Settlement:
* The RBI will determine the minimum price for accepted bids.
* The RBI has the discretion to accept or reject bids.
* Auction results will be announced on July 22, 2016.
* Payment by successful bidders is due on July 25, 2016.
Other Details:
* Government Stocks will be issued in Subsidiary General Ledger (SGL) accounts or Stock Certificates.
* Interest will be paid half-yearly.
* The Stocks will be repaid at par on December 15, 2023; January 11 2026; December 19, 2034; June 22, 2045; respectively.
* The Stocks qualify for ready forward facility.
* The Stocks are eligible for When Issued trading between July 19-22, 2016.
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 non-competitive bids electronically through the RBI's EKuber system within the specified timelines, based on their investment strategies and client orders. Ensure compliance with the terms and conditions outlined in the notification and the General Notification F. No. 4(13)/WM/2008.
Investors (Individuals and Institutions):
* Impact: Eligible individuals and institutions can invest in government securities through competitive and non-competitive bidding.
* Action Required: Submit bids through their banks or Primary Dealers (PDs), adhering to the specified minimum investment amount and bid submission timelines.
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: Issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: Category of financial institutions eligible to participate in the auction.
All State Cooperative Banks: Category of financial institutions eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: Category of financial institutions eligible to participate in the auction.
All Financial Institutions: Category of institutions eligible to participate in the auction.
All Primary Dealers: Category of financial institutions eligible to participate in the auction.
Mumbai: City in Maharashtra, India, where the Reserve Bank of India will conduct the auctions.
RBI/2016-2017/20
Ref.No.IDMD/124/08.02.032/2016-17 July 18, 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 (re-issue) four dated securities for notified amount of Rs
15,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Date Settlement
No Amount date
(in Rs crore)
4(3)-W&M/2016 dated
1 7.68% GS 2023 3,000
July 18, 2016
4(3)-W&M/2016(ii)
2 7.59% GS 2026 8,000 dated
July 18, 2016
July 22, 2016 July 25, 2016
4(3)W&M/2016(iii) (Friday) (Monday)
3 7.73% GS 2034 2,000 dated
July 18, 2016.
4(3)-W&M/2016(ii)
4 8.13% GS 2045 2,000
dated July 18, 2016
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 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 July
22, 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 July 22, 2016 and payment by successful
bidders will be on July 25, 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 December 15, 2023; January 11 2026;
December 19, 2034; June 22, 2045; respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period July 19- July 22 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