Executive Summary:
The Reserve Bank of India (RBI) announces the auction of four Government of India dated securities for a notified amount of Rs 15,000 crore. The auction, conducted by the RBI at Mumbai, will be price-based using a multiple price method. Bids must be submitted electronically via the RBI Core Banking Solution EKuber system on April 22, 2016, and payment by successful bidders is due on April 25, 2016.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued for a total notified amount of Rs 15,000 crore.
* The securities and their amounts are: 7.68 GS 2023 (Rs 3,000 crore), 7.59 GS 2026 (Rs 8,000 crore), 7.73 GS 2034 (Rs 2,000 crore), and 8.13 GS 2045 (Rs 2,000 crore).
* The auction is price-based using the multiple price method.
Bidding Process:
* Both competitive and non-competitive bids must be submitted electronically via the RBI Core Banking Solution EKuber system on April 22, 2016.
* Non-competitive bids are accepted between 10:30 a.m. and 11:30 a.m., and competitive bids between 10:30 a.m. and 12:00 noon.
* Minimum bid amount is Rs.10,000 nominal and in multiples of Rs 10,000 thereafter.
* Government Stock up to 5% of the notified amount will be allotted to eligible individuals and institutions under the Scheme for Non-competitive Bidding.
Allotment and Payment:
* The RBI determines the minimum price for accepted bids, rejecting lower bids.
* RBI has the discretion to accept or reject any or all bids.
* Auction results will be announced on April 22, 2016.
* Payment by successful bidders is due on April 25, 2016.
Securities Features:
* Stocks will be issued by credit to Subsidiary General Ledger Account (SGL) or in the form of Stock Certificates.
* Interest is paid half-yearly.
* The Stocks will be repaid at par on December 15, 2023; January 11 2026; December 19, 2034; June 22, 2045; respectively.
* The Stocks qualify for ready forward facility and When Issued trading.
Impact Analysis:
Scheduled Commercial Banks
* 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 via the RBI Core Banking Solution EKuber system by the specified deadlines.
State Cooperative Banks
* 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 via the RBI Core Banking Solution EKuber system by the specified deadlines.
Scheduled Primary Urban Cooperative Banks
* 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 via the RBI Core Banking Solution EKuber system by the specified deadlines.
Financial Institutions
* 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 via the RBI Core Banking Solution EKuber system by the specified deadlines.
Primary Dealers
* Impact: Need to participate in the auction process, including submitting consolidated non-competitive bids on behalf of constituents.
* Action Required: Submit competitive and non-competitive bids electronically via the RBI Core Banking Solution EKuber system by the specified deadlines; submit a single consolidated noncompetitive bid on behalf of all constituents.
Investors (Individuals and Institutions)
* Impact: Opportunity to invest in government securities through competitive and non-competitive bidding.
* Action Required: Submit bids through eligible banks or Primary Dealers by the specified deadlines. Ensure bids comply with minimum amount requirements.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for conducting the auctions.
Government of India: The 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/2015-16/375
Ref.No.IDMD/2353/08.02.032/2015-16 April 18, 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 (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 (in Date date
Rs crore)
4(3)-W&M/2016 dated
1 7.68% GS 2023 3,000
April 18, 2016
4(3)-W&M/2016(i) dated
2 7.59% GS 2026 8,000
April 18, 2016
April 22, 2016
April 25, 2016
4(3)W&M/2016(ii) dated (Friday)
3 7.73% GS 2034 2,000 (Monday)
April 18, 2016.
4(3)-W&M/2016(iii) dated
4 8.13% GS 2045 2,000
April 18, 2016
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 CoreBanking 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
April 22, 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 April 22, 2016 and payment by successful
bidders will be on April 25, 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 December 15, 2023; January 11 2026;
December 19, 2034; June 22, 2045; respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period April 20-22, 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