Executive Summary:
The Reserve Bank of India (RBI) announced the auction of four Government of India dated securities for a notified amount of ₹15,000 crore. The auction will be price-based using a multiple price method and conducted by the RBI in Mumbai. Both competitive and non-competitive bids must be submitted electronically via the RBI’s e-Kuber system by specified deadlines on November 24, 2017, with payment by successful bidders due on November 27, 2017.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued for a total notified amount of ₹15,000 crore.
* GoI retains the option to retain additional subscriptions up to ₹1,000 crore against any security.
* The auction is price-based using a multiple price method.
* RBI Mumbai will conduct the auctions.
Bidding Process:
* Minimum bid amount is ₹10,000 nominal and in multiples thereof.
* Up to 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 their constituents via e-Kuber.
* Both competitive and non-competitive bids must be submitted electronically on the e-Kuber system.
* Physical bids are not accepted except in extraordinary circumstances.
* Non-competitive bids: 10:30 a.m. and 11:30 a.m.
* Competitive bids: 10:30 a.m. and 12:00 noon on November 24, 2017.
* 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 Other Details:
* Auction results will be announced on November 24, 2017.
* Payment by successful bidders is due on November 27, 2017.
* Securities will be issued via SGL account or Stock Certificate.
* Interest will be paid half-yearly.
* Stocks will be repaid at par on their respective maturity dates: December 19, 2022; September 17, 2031; December 5, 2033; and November 28, 2051.
* The stocks qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading during the period November 21 – November 24, 2017
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, and Primary Dealers:
Impact: These entities can participate in the auction of Government of India dated securities. They are subject to the rules and procedures outlined in the notification, including electronic bidding via e-Kuber, adherence to bidding deadlines, and settlement procedures.
Action Required: Prepare and submit competitive and/or non-competitive bids through the e-Kuber system by the specified deadlines on November 24, 2017, and ensure funds are available for payment by November 27, 2017, if bids are successful.
Eligible Individuals and Institutions under the Scheme for Non-competitive Bidding Facility:
Impact: These entities have the opportunity to participate in the auction through the non-competitive bidding process, with a portion of the notified amount reserved for them.
Action Required: Submit firm orders to their bank or PD, who will then submit a consolidated non-competitive bid on their behalf via the e-Kuber system.
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. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.
Action Required: Investors should take note that Government Stocks will be repaid at par on December 19, 2022; September 17, 2031; December 5, 2033, and November 28, 2051 respectively.
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 institutions eligible to participate in the auction.
All Primary Dealers: A category of financial institutions eligible to participate in the auction.
Mumbai, Maharashtra: The location where the Reserve Bank of India will conduct the auctions.
RBI/2017-18/98
Ref.No.IDMD/1243/08.02.032/2017-18 November 20, 2017
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
` 15,000 crore as per the following details:
Notified
Sr Settlement
Security Amount GoI Notification Auction Date
No date
(in ` crore)
1 6.84% GS 2022 3,000
F.No.4(7) W&M/2017 November November
2 6.68% GS 2031 8,000
dated 24, 2017 27, 2017
3 6.57% GS 2033 2,000 November 20, 2017 (Friday) (Monday)
4 6.62% GS 2051 2,000
Total 15,000
Subject to the limit of ` 15000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to ` 1000 Cr against any of the above security.
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 ` 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 behalfof 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 November 24,
2017. 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 November 24, 2017 (Friday) and payment by
successful bidders will be on November 27, 2017 (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 19, 2022; September 17, 2031;
December 5, 2033, and November 28, 2051 respectively.
(ix) The Stocks will qualify for the ready forward facility.
(x) The Stocks will be eligible for “When Issued” trading during the period November 21 –
November 24, 2017 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
(Latha Vishwanath)
General Manager