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 11,000 crore. The auctions will be price-based using a multiple price method and conducted by the RBI in Mumbai. Bids must be submitted electronically via the RBI’s e-Kuber system by January 27, 2017, with payment due on January 30, 2017.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities are offered for sale/reissue.
* The total notified amount is Rs 11,000 crore.
* Securities include: 6.84 GS 2022, 6.97 GS 2026, 7.73 GS 2034, and 7.06 GS 2046.
* The auction is price-based using the multiple price method.
Bidding Process:
* Both competitive and non-competitive bids must be submitted electronically via the RBI’s e-Kuber system.
* Non-competitive bids are accepted between 10:30 a.m. and 11:30 a.m.
* Competitive bids are accepted between 10:30 a.m. and 12:00 noon.
* Physical bids are not accepted except in extraordinary circumstances.
* Government Stock up to 5% of the notified amount will be allotted to eligible individuals/institutions under the Scheme for Non-competitive Bidding Facility.
* The minimum bid amount is Rs 10,000 nominal and in multiples thereof.
* The aggregate amount of bids submitted by a person should not exceed the notified amount of auction.
* RBI has the discretion to accept or reject any or all bids.
Settlement and Other Details:
* Auction results will be announced on January 27, 2017.
* Payment by successful bidders is due on January 30, 2017.
* The stocks will be issued by credit to SGL accounts or in the form of Stock Certificates.
* Interest will be paid half-yearly.
* The stocks will be repaid at par on their respective maturity dates: December 19, 2022; September 6, 2026; December 19, 2034; and October 10, 2046.
* The stocks qualify for the ready forward facility and are eligible for When Issued trading between January 24-27, 2017.
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 of India dated securities.
* Action Required: Submit competitive and/or non-competitive bids electronically through the RBI’s e-Kuber system by the specified deadlines.
Eligible Individuals and Institutions:
* Impact: Can participate in the auction through the non-competitive bidding facility.
* Action Required: Submit firm orders to their bank or PD, who will then submit a consolidated non-competitive bid on their behalf.
Investors:
* Impact: Can invest in Government of India dated securities.
* Action Required: Submit bids in electronic format on the Reserve Bank of India Core Banking Solution EKuber system. Ensure the aggregate amount of bids submitted does not exceed the notified amount of auction.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of government securities.
Government of India: The issuer of the 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 financial institutions eligible to participate in the auction.
All Primary Dealers: A category of financial institutions eligible to participate in the auction.
Mumbai, Maharashtra: Location where the Reserve Bank of India will conduct the auctions.
RBI/2016-17/215
Ref. No. IDMD/1860/08.02.032/2016-17 January 23, 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 11,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in Rs crore)
4(3)-W&M/2016 dated
1 6.84% GS 2022 2,000
January 23, 2017.
4(3)-W&M/2016(i) dated
2 6.97% GS 2026 5,000 January 27, January 30,
January 23, 2017.
2017 2017
3 7.73% GS 2034 2,000 4(3)-W&M/2016(ii) dated (Friday) (Monday)
January 23, 2017.
4(3)-W&M/2016(iii) dated
4 7.06% GS 2046 2,000
January 23, 2017.
Total 11,000
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 BiddingFacility 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
January 27, 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 January 27, 2017 (Friday). and payment by
successful bidders will be on January 30, 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 December 19, 2022;
September 6, 2026; 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 January 24—
January 27, 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
(Chandan Kumar)
General Manager