Executive Summary:
The Reserve Bank of India (RBI) announces the auction of five Government of India dated securities for a notified amount of ₹12,000 crore. The auction, conducted by RBI at Mumbai, is price-based using a multiple price method. Both competitive and non-competitive bids must be submitted electronically via the RBI’s e-Kuber system by August 3, 2018, with payment by successful bidders due on August 6, 2018.
Key Points / Main Content:
Auction Details:
* Issuer/Reissue of five dated securities totaling ₹12,000 crore.
* GoI can retain additional subscriptions up to ₹1,000 crore against any one or more securities, subject to the total notified amount.
* Auction is price-based using the multiple price method.
* Conducted by the Reserve Bank of India at Mumbai.
Bidding Process:
* Minimum issue amount is ₹10,000 nominal and in multiples thereof.
* 5% of the notified amount is allotted to eligible individuals/institutions under the Non-Competitive Bidding Facility.
* Banks/PDs must submit a single consolidated non-competitive bid on behalf of all constituents via e-Kuber.
* Both competitive and non-competitive bids must be submitted electronically via e-Kuber on August 3, 2018.
* Non-competitive bids: 10:30 a.m. - 11:30 a.m.; Competitive bids: 10:30 a.m. - 12:00 noon.
* 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 any bid.
Settlement and Terms:
* Auction results will be announced on August 3, 2018, and payment is due on August 6, 2018.
* Securities issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest is paid half-yearly.
* Repayment at par on specified dates for each security (April 09, 2020; January 11, 2026; December 07, 2031; December 05, 2033 and October 10, 2046).
* Stocks qualify for ready forward facility.
* Eligible for When Issued trading from July 31 - August 03, 2018, per RBI guidelines.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
* Impact: Can participate in the auction of Government of India dated securities.
* Action Required: Submit competitive and/or non-competitive bids electronically via the RBI’s e-Kuber system by the specified deadlines on August 3, 2018, and make payment by August 6, 2018, if the bid is successful.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
* Impact: Can have Government Stock up to 5% of the notified amount of sale allotted to them.
* Action Required: Submit firm orders to their bank or PD for a consolidated non-competitive bid to be submitted on their behalf via e-Kuber.
Investors:
* Impact: Can submit more than one competitive bid at different prices.
* Action Required: Ensure that the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
Key Entities Referenced
Reserve Bank of India: Central bank of India, responsible for conducting the auctions.
Government of India: Issuer of the dated securities being auctioned.
All Scheduled Commercial Banks: Entities eligible to participate in the auction.
All State Cooperative Banks: Entities eligible to participate in the auction.
All Scheduled Primary Urban Cooperative Banks: Entities eligible to participate in the auction.
All Financial Institutions: Entities eligible to participate in the auction.
All Primary Dealers: Entities eligible to participate in the auction.
Mumbai, Maharashtra: Location where the auctions will be conducted by the Reserve Bank of India.
RBI/2018-19/29
Ref.No.IDMD/259/08.02.032/2018-19 July 30, 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 (issue/re-issue) five dated securities for notified amount
of `12,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in Rs crore)
1 6.65% GS 2020 2,000
2 7.59% GS 2026 2,000
F.No.4(6)
Aug 03, 2018 Aug 06, 2018
3 GOI FRB 2031 4,000 W&M/2018 dated
(Friday) (Monday)
July 30, 2018
4 6.57% GS 2033 2,000
5 7.06% GS 2046 2,000
Total 12,000
Subject to the limit of `12000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to `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 `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 Aug 03, 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 Aug 03, 2018 (Friday) and payment by
successful bidders will be on Aug 06, 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; January 11, 2026;
December 07, 2031; December 05, 2033 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 Jul 31– Aug 03, 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