Executive Summary:
The Government of India is offering to sell/reissue four dated securities for a notified amount of Rs 15,000 crore through an auction conducted by the Reserve Bank of India (RBI). The auction, which is price-based and uses a multiple price method, will take place on October 28, 2016, with payment due on November 1, 2016. Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system.
Key Points / Main Content:
* **Auction Details:**
* Four Government of India dated securities are offered for sale/reissue, totaling Rs 15,000 crore.
* The auction is price-based and uses a multiple price method.
* RBI Mumbai will conduct the auctions.
* Auction date: October 28, 2016.
* Settlement date: November 1, 2016.
* **Bidding Process:**
* Minimum bid amount: Rs. 10,000 nominal and in multiples thereof.
* Up to 5% of the notified amount is reserved for non-competitive bidding.
* Competitive and non-competitive bids must be submitted electronically via the RBI e-Kuber system.
* Non-competitive bid submission: 10.30 a.m. to 11.30 a.m.
* Competitive bid submission: 10.30 a.m. to 12.00 noon.
* Bids in physical form are not accepted except under extraordinary circumstances.
* The aggregate amount of bids submitted by a person should not exceed the notified amount of the auction.
* **Auction Outcome:**
* RBI determines the minimum price for accepted bids and can reject any or all bids.
* Auction results will be announced on October 28, 2016.
* **Securities Details:**
* Government Stocks will be issued via SGL account or Stock Certificate.
* Interest will be paid half-yearly.
* Repayment dates vary based on the specific stock (December 19, 2022; September 06, 2026; December 19, 2034; October 26, 2055).
* The stocks qualify for ready forward facility and "When Issued" trading between October 25-28, 2016.
Impact Analysis:
* **Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:**
* *Impact:* Need to participate in the auction process for acquiring government securities.
* *Action Required:* Submit competitive and/or non-competitive bids electronically through the RBI e-Kuber system within the specified timelines. Inform constituents about the non-competitive bidding facility.
* **Eligible Individuals and Institutions (under Non-competitive Bidding Facility):**
* *Impact:* Opportunity to acquire Government Stock through the non-competitive bidding process.
* *Action Required:* Submit firm orders to their bank or PD for non-competitive bidding.
* **Investors:**
* *Impact:* Have the opportunity to invest in government securities.
* *Action Required:* Submit bids through the e-Kuber system.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions and determining the minimum price for Government Stock.
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: An entity eligible to participate in the auction.
All Primary Dealers: An entity eligible to participate in the auction.
Government Stock: Securities being auctioned.
RBI/2016-17/100
Ref. No. IDMD/917/08.02.032/2016-17 October 24, 2016
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 15,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in Rs crore)
3,000 4(2)-W&M/2016 dated
1 6.84% GS 2022
October 24, 2016.
7,000 4(2)-W&M/2016(i) dated
2 6.97% GS 2026
October 24, 2016.
October November
2,000 4(2)-W&M/2016(ii) dated 28, 2016 01, 2016
7.73% GS 2034
3
October 24, 2016. (Friday) (Tuesday)
3,000 4(2)-W&M/2016(iii) dated
4 7.72% GS 2055
October 24, 2016.
Total 15,000
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 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
October 28, 2016. 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 October 28, 2016 and payment by
successful bidders will be on November 01, 2016. (Tuesday).
(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 06, 2026;
December 19, 2034, 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 October 25-October
28, 2016. 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
(Rajendra Kumar)
General Manager