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. 12,000 crore. The auction, conducted by the RBI in Mumbai, is price-based using a multiple price method. Bids must be submitted electronically via the RBI’s E-Kuber system by June 29, 2018, and payment by successful bidders is due on July 2, 2018.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued.
* Total notified amount: Rs. 12,000 crore.
* GoI has the option to retain additional subscription up to Rs 1000 Cr each against any one or more of the above securities.
* Auction Type: Price-based using multiple price method.
* Conducted by: Reserve Bank of India, Mumbai.
Bidding Process:
* Minimum bid amount: Rs. 10,000 nominal and in multiples thereof.
* Non-competitive bidding: Up to 5% of the notified amount is reserved for eligible individuals and institutions.
* Single consolidated noncompetitive bid to be submitted electronically by banks/PDs on behalf of constituents.
* Bids must be submitted electronically via the RBI's E-Kuber system. Physical bids are not accepted except in extraordinary circumstances.
* Non-competitive bid submission: 10.30 a.m. and 11.30 a.m. on June 29, 2018.
* Competitive bid submission: 10.30 a.m. and 12.00 noon on June 29, 2018.
* Multiple competitive bids are allowed, but the aggregate amount should not exceed the notified amount.
* RBI determines the minimum price; bids below this price will be rejected.
* RBI has the discretion to accept or reject bids.
Settlement and Issue:
* Auction results will be announced on June 29, 2018.
* Payment by successful bidders is due on July 2, 2018.
* Securities will be issued via SGL account or Stock Certificate.
* Interest will be paid half-yearly.
* Stocks qualify for ready forward facility and "When Issued" trading (June 25-29, 2018).
* Repayment at par on specified dates for each security.
Impact Analysis:
Scheduled Commercial Banks:
* Impact: Participate in the auction, submit bids on behalf of constituents, and manage SGL accounts.
* Action Required: Submit competitive and non-competitive bids through E-Kuber within the specified timeframe. Ensure timely payment for successful bids.
State Cooperative Banks:
* Impact: Participate in the auction, submit bids on behalf of constituents, and manage SGL accounts.
* Action Required: Submit competitive and non-competitive bids through E-Kuber within the specified timeframe. Ensure timely payment for successful bids.
Scheduled Primary Urban Cooperative Banks:
* Impact: Participate in the auction, submit bids on behalf of constituents, and manage SGL accounts.
* Action Required: Submit competitive and non-competitive bids through E-Kuber within the specified timeframe. Ensure timely payment for successful bids.
Financial Institutions:
* Impact: Participate in the auction and manage securities holdings.
* Action Required: Submit competitive and non-competitive bids through E-Kuber within the specified timeframe. Ensure timely payment for successful bids.
Primary Dealers:
* Impact: Participate in the auction, submit bids on behalf of constituents, and manage SGL accounts.
* Action Required: Submit competitive and non-competitive bids through E-Kuber within the specified timeframe. Ensure timely payment for successful bids.
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.
Scheduled Commercial Banks: One of the entities to whom the notification is addressed regarding the auction of Government of India Dated Securities.
State Cooperative Banks: One of the entities to whom the notification is addressed regarding the auction of Government of India Dated Securities.
Primary Urban Cooperative Banks: One of the entities to whom the notification is addressed regarding the auction of Government of India Dated Securities.
Financial Institutions: One of the entities to whom the notification is addressed regarding the auction of Government of India Dated Securities.
Primary Dealers: One of the entities to whom the notification is addressed regarding the auction of Government of India Dated Securities.
Government of India Dated Securities: The securities being auctioned, with a notified amount of Rs. 12,000 crore.
E-Kuber: The Reserve Bank of India Core Banking Solution system used for submitting bids electronically.
RBI/2017-18/207
Ref. No. IDMD/3267/08.02.032/2017-18 June 25, 2018
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.
12,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in Rs crore)
1 6.84% GS 2022 3,000
F.No.4(6)
2 7.17% GS 2028 4,000
W&M/2018 June 29, 2018 July 2, 2018
dated (Friday) (Monday)
3 7.40% GS 2035 2,000
June 25, 2018
4 7.72% GS 2055 3,000
Total 12,000
Subject to the limit of Rs 12000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to Rs 1000 Cr each against any one or more of the above securities.
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(2)–W&M/2018, dated March
27, 2018 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 June 29, 2018.
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 29, 2018 (Friday) and payment by
successful bidders will be on July 2, 2018 (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 Dec 19, 2022; Jan. 08, 2028; Sep 09, 2035;
and Oct. 26, 2055 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 25 – June 29,
2018 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
(Arvind Kumar)
General Manager