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, 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) on June 30, 2016. Payment by successful bidders is due on July 01, 2016.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued.
* The total notified amount for the auction is Rs 15,000 crore.
* Securities include: 7.68 GS 2023, 7.59 GS 2026, 7.50 GS 2034, and 7.72 GS 2055.
* The auction is price-based using a multiple price method.
Bidding Process:
* Minimum bid amount is Rs 10,000 nominal 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 E-Kuber.
* Both competitive and non-competitive bids must be submitted electronically via E-Kuber on June 30, 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 are not 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 determines the minimum price for accepted bids and can reject bids.
Result and Settlement:
* Auction results will be announced on June 30, 2016.
* Payment by successful bidders is due on July 01, 2016.
* Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* Stocks mature on December 15, 2023; January 11, 2026; August 10, 2034; October 26, 2055 respectively.
* Stocks qualify for ready forward facility.
* Stocks are eligible for When Issued trading between June 28, 2016 and June 30, 2016.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
* Impact: Must participate in the auction process as per the guidelines to acquire government securities.
* Action Required: Submit competitive and/or non-competitive bids via E-Kuber within the specified timelines; ensure compliance with minimum bid amounts and other requirements.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
* Impact: Opportunity to acquire 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.
* Action Required: Submit bids through the E-Kuber system, adhering to the specified guidelines and deadlines.
Key Entities Referenced
Reserve Bank of India: Central bank of India, responsible for conducting the auctions.
Scheduled Commercial Banks: Banks eligible to participate in the auction.
State Cooperative Banks: Banks eligible to participate in the auction.
Primary Dealers: Entities eligible to participate in the auction.
Government of India: Issuer of the dated securities being auctioned.
7.68 GS 2023: Government Security with coupon rate 7.68% maturing in 2023.
7.59 GS 2026: Government Security with coupon rate 7.59% maturing in 2026.
Mumbai, Maharashtra: Location where the Reserve Bank of India will conduct the auctions.
RBI/2015-16/434
Ref. No. IDMD/2953/08.02.032/2015-16 June 27, 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
June 27, 2016
2 7.59% GS 2026 8,000 4(3)-W&M/2016 (i)dated June 30, July 01,
June 27, 2016 2016 2016
4(3)-W&M/2016(ii) dated (Thursday) (Friday)
3 7.50% GS 2034 2,000
June 27, 2016
4(3)-W&M/2016(iii)
4 7.72% GS 2055 2,000
dated June 27, 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 June
30, 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 June 30, 2016 and payment by successful
bidders will be on July 01, 2016 (Friday).
(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;
August 10, 2034; October 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 28, 2016– June
30, 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