Executive Summary:
The Reserve Bank of India (RBI) announces the auction of five Government of India dated securities for a total notified amount of Rs. 12,000 crore. The auction, price-based using a multiple price method, will be conducted by the RBI in Mumbai on April 20, 2018, with payment due on April 23, 2018. Both competitive and non-competitive bids must be submitted electronically through the RBI's e-Kuber system.
Key Points / Main Content:
Auction Details:
* Five Government of India dated securities will be reissued.
* The total notified amount for the auction is Rs. 12,000 crore.
* GoI can retain additional subscription up to Rs 1000 Cr against any one or more of the above securities.
* The auction will be price-based using the multiple price method.
* RBI Mumbai will conduct the auctions.
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/institutions under the Non-Competitive Bidding Facility.
* Banks/Primary Dealers (PDs) must submit a single consolidated non-competitive bid electronically on behalf of their constituents.
* Both competitive and non-competitive bids must be submitted electronically via the RBI e-Kuber system on April 20, 2018.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
* RBI has the discretion to accept or reject any or all bids.
Settlement and Issue:
* Auction results will be announced on April 20, 2018.
* Payment by successful bidders is due on April 23, 2018.
* Government Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* The Stocks will qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading during the period April 17 April 20, 2018.
Maturity Dates:
* The Government Stocks will be repaid at par on April 09, 2020; November 07, 2024; January 08, 2028; December 05, 2033 and October 26, 2055 respectively.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
Impact: These entities are directly involved in the auction process for Government of India dated securities.
Action Required: They need to participate in the auction by submitting competitive and/or non-competitive bids through the RBI e-Kuber system, adhering to the specified timelines and procedures. They also need to inform their constituents about the auction and facilitate their participation.
Investors (Individuals and Institutions):
Impact: Investors have the opportunity to invest in Government of India dated securities through competitive and non-competitive bidding.
Action Required: Eligible investors who want to participate in the auction should submit their bids through Scheduled Commercial Banks or Primary Dealers, following the guidelines for non-competitive bidding, or submit competitive bids via the e-Kuber system if eligible.
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: A category of banks eligible to participate in the auction.
All State Cooperative Banks: A category of banks eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: A category of banks 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 entities eligible to participate in the auction.
Mumbai, Maharashtra: The location where the Reserve Bank of India will conduct the auctions.
RBI/2017-18/165
Ref. No. IDMD/2669/08.02.032/2017-18 April 16, 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) five dated securities for notified amount of Rs.
12,000 crore as per the following details:
Notified
Sr Settlement
Security Amount GoI Notification Auction Date
No date
(in Rs crore)
1 6.65% GS 2020 2,000
2 GOI FRB 2024 3,000
F.No.4(6) W&M/2018
April 20, 2018 April 23, 2018
3 7.17% GS 2028 3,000 dated
(Friday) (Monday)
April 16, 2018
4 6.57% GS 2033 1,000
5 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 April 20, 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 April 20, 2018 (Friday) and payment by
successful bidders will be on April 23, 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 April 09, 2020; November 07, 2024;
January 08, 2028; December 05, 2033 and 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 April 17 – April 20,
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