Executive Summary:
The Reserve Bank of India (RBI) announced the auction of four Government of India dated securities for a total notified amount of ₹18,000 crore. The auction will be conducted by the RBI in Mumbai, with results announced on September 1, 2017, and payment due on September 4, 2017. Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system on September 1, 2017.
Key Points / Main Content:
* **Auction Details:**
* Four government securities are offered, with varying maturity dates and notified amounts.
* Auction method: yield-based for new security, price-based for others, using multiple price method.
* Auction conducted by RBI in Mumbai.
* **Bidding Process:**
* Minimum bid amount: ₹10,000 nominal and in multiples thereof.
* Up to 5% of the notified amount is reserved for non-competitive bidding by eligible individuals/institutions.
* Bids must be submitted electronically via RBI's e-Kuber system on September 1, 2017. Physical bids are not accepted except in extraordinary circumstances.
* Non-competitive bids: 10:30 a.m. to 11:30 a.m. Competitive bids: 10:30 a.m. to 12:00 noon.
* Aggregate bids from a single person cannot exceed the notified auction amount.
* RBI determines the minimum price; bids below this price will be rejected.
* RBI has the right to accept or reject any bid.
* **Post-Auction & Security Features:**
* Auction results announced: September 1, 2017. Payment by successful bidders: September 4, 2017.
* Securities issued via Subsidiary General Ledger Account (SGL) or Stock Certificate.
* Interest paid half-yearly.
* Securities are repaid at par on their respective maturity dates.
* Stocks qualify for ready forward facility.
* Eligible for "When Issued" trading between August 29 and September 1, 2017, per RBI guidelines.
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. They need to understand the terms and conditions, bidding process, and settlement details to participate effectively.
Action Required:
Submit competitive and non-competitive bids electronically via the RBI's e-Kuber system within the specified timeframes on September 1, 2017, adhering to the guidelines and terms outlined in the notification and related circulars.
**Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding**
Impact:
These entities have the opportunity to participate in the auction through the non-competitive bidding facility, with up to 5% of the notified amount reserved for them.
Action Required:
Submit firm orders to their bank or PD who will then submit a single consolidated non-competitive bid on their behalf via the RBI's e-Kuber system between 10:30 a.m. and 11:30 a.m. on September 1, 2017.
Key Entities Referenced
All Scheduled Commercial Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
All State Cooperative Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
All Scheduled Primary Urban Cooperative Banks: A category of banks eligible to participate in the auction of Government of India Dated Securities.
All Financial Institutions: A category of institutions eligible to participate in the auction of Government of India Dated Securities.
All Primary Dealers: A category of entities eligible to participate in the auction of Government of India Dated Securities.
Government of India Dated Securities: Securities issued by the Government of India that are being auctioned.
Reserve Bank of India: The central bank of India, responsible for conducting the auctions of Government of India Dated Securities.
Mumbai, Maharashtra: The city in India where the Reserve Bank of India will conduct the auctions.
RBI/2017-18/50
Ref.No.IDMD/558/08.02.032/2017-18 August 28, 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 ` 18,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in ` crore)
1 6.84% GS 2022 3,000 4(7)-W&M/2017 dated
August 28, 2017
2 NI GS maturing on 9,000 4(7)-W&M/2017(i)dated
September 17, 2031 August 28, 2017. September September
3 6.57% GS 2033 3,000 4(7)-W&M/2017(ii) dated 01, 2017 04, 2017
August 28, 2017.
(Friday) (Monday)
4 7.72% GS 2055 3,000
4(7)-W&M/2017(iii) dated
August 28, 2017.
Total 18,000
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 ` 10,000/- (nominal) and in multiples of `
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 September 01,
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 September 01, 2017 (Friday) and payment
by successful bidders will be on September 04, 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 17, 2031;
December 5, 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 August 29-
September 01, 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