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. 12,000 crore. The auction will be price-based using a multiple price method, conducted by the RBI in Mumbai. Bids must be submitted electronically through the RBI's e-Kuber system on May 25, 2018, with settlement on May 28, 2018.
Key Points / Main Content:
Auction Details:
* Four Government of India dated securities will be reissued.
* The total notified amount is Rs. 12,000 crore, with the government retaining additional subscriptions up to Rs. 1,000 crore per security.
* The auction is price-based using a multiple price method.
* RBI Mumbai will conduct the auctions.
Bidding Process:
* The minimum investment amount is Rs. 10,000 nominal and in multiples thereof.
* Up to 5% of the notified amount will be allotted to eligible individuals and institutions under the Non-competitive Bidding Facility.
* Both competitive and non-competitive bids must be submitted electronically on the RBI e-Kuber system on May 25, 2018.
* Non-competitive bids: 10.30 a.m. and 11.30 a.m.
* Competitive bids: 10.30 a.m. and 12.00 noon.
* The aggregate amount of bids submitted by a person should not exceed the notified amount.
* RBI will determine the minimum price for accepted bids and can reject bids.
Settlement and Issuance:
* Auction results will be announced on May 25, 2018.
* Payment by successful bidders is due on May 28, 2018.
* The stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* The Stocks will qualify for the ready forward facility.
* The Stocks will be eligible for When Issued trading during the period May 22 - May 25, 2018.
Maturity Dates:
* 6.84 GS 2022 matures on Dec 19, 2022.
* 7.17 GS 2028 matures on Jan 08, 2028.
* 7.40 GS 2035 matures on Sep 09, 2035.
* 7.06 GS 2046 matures on Oct 10, 2046.
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. The auction provides an opportunity to invest in government securities.
* Action Required: Submit competitive and non-competitive bids electronically on the RBI e-Kuber system within the specified timeframes on May 25, 2018, and make payments for successful bids on May 28, 2018.
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, Maharashtra: The location where the Reserve Bank of India will conduct the auctions.
RBI/2017-18/179
Ref.No.IDMD/2961/08.02.032/2017-18 May 21, 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 notified amount of Rs.
12,000 crore as per the following details:
Sr Security Notified GoI Notification Auction Settlement
No Amount Date date
(in Rs crore)
1 6.84% GS 2022 3,000 F.No.4(6) May 25, May 28,
W&M/2018 dated 2018 2018
2 7.17% GS 2028 4,000 May 21, 2018 (Friday) (Monday)
3 7.40% GS 2035 2,000
4 7.06% GS 2046 3,000
Total 12,000
Subject to the limit of Rs 12000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to Rs 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 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 Facilityin 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 May 25, 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 May 25, 2018 (Friday) and payment by
successful bidders will be on May 28, 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 Dec 19, 2022; 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 May 22– May 25,
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
(Arvind Kumar)
General Manager