Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of Rs 15,000 crore. The auction will be conducted by the RBI in Mumbai, with results announced on May 12, 2017, and payment due on May 15, 2017. The auction will be yield-based for the new security and price-based for the others, using a multiple price method.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be auctioned.
* The total notified amount is Rs 15,000 crore.
* Securities include: GOI FRB 2024, maturing on Nov 07, 2024 (Rs 3,000 crore); GOI maturing on May 15, 2027 (Rs 8,000 crore); 7.73 GS 2034, maturing on Dec 19, 2034 (Rs 2,000 crore); and 7.06 GS 2046, maturing on Oct 10, 2046 (Rs 2,000 crore).
* The auction for the new security will be yield based, and for others will be price-based.
Bidding Process:
* Minimum bid amount is Rs.10,000 nominal and in multiples of Rs 10,000.
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions under the Non-Competitive Bidding Facility.
* Competitive and non-competitive bids must be submitted electronically on the RBI's e-Kuber system.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon, both on May 12, 2017.
* Physical bids are not accepted except in extraordinary circumstances.
* RBI will determine the minimum price for accepted bids and reserves the right to accept or reject any bid.
Settlement and Other Details:
* Auction results will be announced on May 12, 2017.
* Payment by successful bidders is due on May 15, 2017.
* Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* The Stocks qualify for the ready forward facility.
* The Stocks are eligible for When Issued trading between May 09 - May 12, 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 process. They are also responsible for submitting consolidated non-competitive bids on behalf of their constituents.
* Action Required: Submit competitive and non-competitive bids electronically through the RBI's e-Kuber system by the specified deadlines.
Investors (Individuals and Institutions):
* Impact: Eligible individuals and institutions can participate in the auction through the non-competitive bidding facility.
* Action Required: Submit firm orders to their bank or PD to participate in the non-competitive bidding process.
Reserve Bank of India (RBI):
* Impact: Responsible for conducting the auction, determining the minimum price, and announcing the results.
* Action Required: Conduct the auction, determine the minimum price, announce the results, and manage the issuance of Government Stocks.
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 and seller of dated securities being auctioned.
All Scheduled Commercial Banks: A category of financial institutions eligible to participate in the auction.
All State Cooperative Banks: A category of financial institutions eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: A category of financial institutions eligible to participate in the auction.
All Financial Institutions: A category of institutions eligible to participate in the auction.
All Primary Dealers: A category of financial institutions eligible to participate in the auction.
Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities: A scheme allowing eligible individuals and institutions to bid non-competitively in the auctions of government securities.
RBI/2016-17/301
Ref. No.IDMD/2882/08.02.032/2016-17 May 08, 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 Auction Settlement
Security Amount GoI Notification
No Date date
(in Rs crore)
4(7)-W&M/2017 dated
1 GOI FRB 2024
3,000 May 08, 2017.
NI GS
4(7)-W&M/2017 (i) dated
2 maturing on 8,000
May 08, 2017.
May 15, 2027 May 12, 2017 May 15, 2017
(Friday) (Monday)
4(7)-W&M/2017 (ii) dated
7.73% GS 2034
3
2,000 May 08, 2017.
4(7)-W&M/2017 (iii) dated
4 7.06% GS 2046
2,000 May 08, 2017.
Total 15,000
The auction for the new security will be yield based and for others will be 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 May
12, 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 May 12, 2017 (Friday) and payment by
successful bidders will be on May 15, 2017 (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 November 07, 2024; May 15, 2027;
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 May 09 - May 12,
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