Executive Summary:
The Reserve Bank of India (RBI) announced the auction of four Government of India dated securities for a total notified amount of Rs 14,000 crore. The auction will be conducted by the RBI in Mumbai on January 8, 2016, with payment due on January 11, 2016. Both competitive and non-competitive bids must be submitted electronically through the RBI's e-Kuber system.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be auctioned: 7.68 GS 2023, New GS 2026, 7.73 GS 2034 and 7.72 GS 2055.
* The total notified amount for the auction is Rs 14,000 crore.
* The auction for the new security will be yield based and for the others will be price based.
* The auction will be conducted by the Reserve Bank of India at Mumbai.
* The result of the auctions will be announced on January 8, 2016.
Bidding Process:
* Both competitive and non-competitive bids must be submitted electronically via the RBI's e-Kuber system.
* Non-competitive bids should be submitted between 10:30 a.m. and 11:30 a.m. on January 8, 2016.
* Competitive bids should be submitted between 10:30 a.m. and 12:00 noon on January 8, 2016.
* Physical bids will not be accepted except in extraordinary circumstances.
* Individual investors and institutions are eligible for non-competitive bidding, with up to 5% of the notified amount allotted under this scheme.
* The minimum bid amount is Rs.10,000 and in multiples of Rs 10,000 thereafter.
* The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
* RBI has the discretion to accept or reject any or all bids.
Issue and Payment:
* Successful bidders must make payment on January 11, 2016.
* The Government Stocks will be issued by credit to Subsidiary General Ledger Account (SGL) or in the form of Stock Certificate.
* Interest on the Government Stock will be paid half-yearly.
* The Government Stocks will be repaid at par on December 15, 2023; January 11, 2026; December 19, 2034, and October 26, 2055 respectively.
Other Features:
* The Stocks will qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading during the period January 5-8, 2016.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
Impact: These entities are eligible to participate in the auction of Government of India dated securities. They are subject to the rules and procedures outlined in the notification.
Action Required: Submit competitive and/or non-competitive bids electronically via the RBI's e-Kuber system within the specified timeframes on January 8, 2016. Ensure payment by January 11, 2016, if the bid is successful.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding:
Impact: Can participate in the auction through the non-competitive bidding facility. Allotment will be at the weighted average rate of yield/price that emerges in the auction on the basis of the competitive bidding.
Action Required: Submit firm orders to their bank or PD, who will then submit a single consolidated non-competitive bid on their behalf.
Investors:
Impact: Investors can submit more than one competitive bid at different prices in electronic format on the Reserve Bank of India Core Banking Solution EKuber system
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 and determining the minimum price for Government Stock.
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 Reserve Bank of India will conduct the auctions.
RBI/2015-16/280
Ref. No. IDMD/1438/08.02.032/2015-16 January 4, 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 14,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in Rs crore)
2,000 4(2)-W&M/2015 dated
1 7.68% GS 2023
January 4, 2016.
8,000 4(2)-W&M/2015(i) dated
2 New GS 2026
January 4, 2016. January 8, January 11,
7.73% GS 2034 2,000 4(2)-W&M/2015(ii) dated 2016 2016
3
January 4, 2016 (Friday) (Monday)
2,000 4(2)-W&M/2015(iii)
4 7.72% GS 2055 dated
January 4, 2016.
Total 14,000
The auction for new security will be yield based and for others 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
January 8, 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 January 8, 2016 and payment by successful
bidders will be on January 11, 2016. (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 December15, 2023; January 11, 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 January 5-8, 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
(P K Pati)
General Manager