Executive Summary:
The Reserve Bank of India (RBI) announced the auction of four Government of India (GoI) dated securities for a notified amount of ₹11,000 crore. The auction, conducted by the RBI in Mumbai, is price-based using a multiple price method. Bids must be submitted electronically via the RBI’s e-Kuber system by October 12, 2018, with payment due on October 15, 2018.
Key Points / Main Content:
Auction Details:
* GoI is selling/reissuing four dated securities for a total of ₹11,000 crore.
* GoI can retain additional subscriptions up to ₹1,000 crore against any one or more securities.
* The auction is price-based using a multiple price method.
* RBI Mumbai will conduct the auctions.
Bidding Process:
* Stocks will be issued for a minimum of ₹10,000 nominal and in multiples of ₹10,000.
* Up to 5% of the notified amount is reserved for non-competitive bidding by eligible individuals/institutions.
* Banks/Primary Dealers (PDs) must submit a single consolidated non-competitive bid for their constituents electronically.
* Both competitive and non-competitive bids must be submitted electronically on the RBI’s e-Kuber system on October 12, 2018.
* Non-competitive bids: 10:30 a.m. to 11:30 a.m.; competitive bids: 10:30 a.m. to 12:00 noon.
* Physical bids are not accepted except in extraordinary circumstances.
* Investors can submit multiple competitive bids, but the total bid amount cannot exceed the notified auction amount.
* RBI determines the minimum acceptable price and can reject bids.
Result and Settlement:
* Auction results will be announced on October 12, 2018.
* Payment by successful bidders is due on October 15, 2018.
* Securities will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
Security Details:
* Securities mature on April 16, 2023; January 08, 2028; September 09, 2035; and October 10, 2046, respectively.
* The stocks qualify for ready forward facility.
* The stocks are eligible for When Issued trading between Oct 9-12, 2018.
Impact Analysis:
Scheduled Commercial Banks / State Cooperative Banks / Scheduled Primary Urban Cooperative Banks / Financial Institutions / Primary Dealers:
Impact: Need to participate in the auction process if they wish to acquire the government securities.
Action Required: Submit competitive and/or non-competitive bids electronically through the RBI’s e-Kuber system by the specified deadlines. Banks/PDs must consolidate non-competitive bids from their constituents.
Investors (Individuals and Institutions):
Impact: Opportunity to invest in government securities.
Action Required: Submit bids through eligible banks or Primary Dealers (PDs) following the guidelines for competitive and non-competitive bidding.
Reserve Bank of India (RBI):
Impact: Responsible for conducting the auction and managing the bidding process.
Action Required: Conduct the auction, determine the minimum acceptable price, announce the results, and issue the securities to successful bidders.
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 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: City in Maharashtra, where the Reserve Bank of India will conduct the auctions.
RBI/2018-19/56
Ref.No.IDMD/820/08.02.032/2018-19 October 8, 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) four dated securities for a notified amount of
`11,000 crore as per the following details:
Notified
Sr GoI Auction Settlement
Security Amount
No Notification Date date
(in ` crore)
1 7.37% GS 2023 3,000
F.No.4(6)
2 7.17% GS 2028 3,000
Oct 12, 2018 Oct 15, 2018
W&M/2018 dated
3 7.40% GS 2035 2,000 (Friday) (Monday)
Oct 8, 2018
4 7.06% GS 2046 3,000
Total 11,000
Subject to the limit of `11000 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 receivedfrom 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 Oct 12, 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 Oct 12, 2018 (Friday) and payment by
successful bidders will be on Oct 15, 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 Apr 16, 2023; Jan 08, 2028; Sep 09, 2035;
and Oct 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 Oct 9 - Oct 12, 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
(Shyni Sunil)
Deputy General Manager