Executive Summary:
The Reserve Bank of India (RBI) announces the auction of five Government of India dated securities for a notified amount of ₹12,000 crore. The auction will be conducted by the RBI in Mumbai. Bids must be submitted electronically via the RBI's e-Kuber system by January 18, 2019, with settlement on January 21, 2019.
Key Points / Main Content:
Auction Details:
* Government of India is selling/reissuing five dated securities for ₹12,000 crore.
* GoI has the option to retain additional subscriptions up to ₹1,000 crore against any one or more securities.
* Auction for the new security (GS 2021) is yield-based; others are price-based using a multiple price method.
* RBI Mumbai will conduct the auctions.
Bidding Process:
* Stocks issued in minimum amounts of ₹10,000 nominal and multiples thereof.
* 5% of the notified amount is reserved for non-competitive bidding by eligible individuals/institutions.
* Competitive and non-competitive bids must be submitted electronically via e-Kuber on January 18, 2019.
* Non-competitive bids: 11:30 a.m. - 12:00 noon; Competitive bids: 11:30 a.m. - 12:30 p.m.
* Physical bids are accepted only in case of system failure.
* 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, and bids below that will be rejected.
* RBI has the right to accept or reject bids.
Settlement and Other Details:
* Auction results will be announced on January 18, 2019, with payment due on January 21, 2019.
* Stocks will be issued via Subsidiary General Ledger (SGL) account or Stock Certificate.
* Interest will be paid half-yearly.
* Stocks mature on Jan 21, 2021; Feb 15, 2027; Aug 28, 2032; Sep 09, 2035; and Oct 10, 2046 respectively.
* Stocks qualify for ready forward facility.
* Eligible for When Issued trading from January 15 - January 18, 2019.
Impact Analysis:
Scheduled Commercial Banks, State Cooperative Banks, Scheduled Primary Urban Cooperative Banks, Financial Institutions, Primary Dealers:
Impact: Must participate in the auction process by submitting bids for Government Stock as per the guidelines. They can submit non-competitive bids on behalf of their constituents.
Action Required: Submit competitive and/or non-competitive bids electronically via e-Kuber by the specified deadlines on January 18, 2019. Ensure they have sufficient funds for settlement on January 21, 2019, if their bids are accepted.
Investors:
Impact: Can invest in Government Stocks through competitive and non-competitive bidding.
Action Required: Submit bids through eligible banks or Primary Dealers by January 18, 2019. Ensure funds are available for settlement on January 21, 2019, if bids are accepted.
Government of India:
Impact: Raises funds through the sale of dated securities.
Action Required: Monitor the auction process and exercise the option to retain additional subscriptions if deemed necessary.
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 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/2018-19/108
Ref.No.IDMD/1824/08.02.032/2018-19 January 14, 2019
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) five dated securities for a notified amount
of `12,000 crore as per the following details:
Notified
Sr Auction Settlement
Security Amount GoI Notification
No Date date
(in ` crore)
1 New GS 2021 2,000
2 8.24% GS 2027 2,000
F.No.4(6) January 18, January 21,
3 7.95% GS 2032 3,000 W&M/2018 dated 2019 2019
4 7.40% GS 2035 2,000 January 14, 2019 (Friday) (Monday)
5 7.06% GS 2046 3,000
Total 12,000
Subject to the limit of `12000 Cr being total notified amount, GoI will have the option to retain
additional subscription up to `1000 Cr each against any one or more of the above securities.
The auction for the new security will be yield based and for other securities it 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 `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 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 18,
2019. Bids in physical form will not be accepted except in extraordinary circumstances. The non-
competitive bids should be submitted between 11.30 a.m. and 12.00 noon and the competitive bids
should be submitted between 11.30 a.m. and 12.30 pm.
(iv) Only in the event of system failure, physical bids would be accepted. Such physical bids should
be submitted to the Public Debt Office (email; Phone no: 022-22632527, 022-22701299) in the
prescribed form obtainable from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx)
before the auction timing ends. In case of technical difficulties, Core Banking Operations Team
should be contacted (email; Phone no: 022-27595414, 022-27595666). For other auction related
difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-
22705125).
(v) An investor can submit more than one competitive bids 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.
(vi) 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.
(vii) The result of the auctions will be announced on January 18, 2019 (Friday) and payment by
successful bidders will be on January 21, 2019 (Monday).
(viii) 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.
(ix) The Government Stocks will be repaid at par on Jan 21, 2021; Feb 15, 2027; Aug 28, 2032;
Sep 09, 2035; and Oct 10, 2046 respectively.
(x) The Stocks will qualify for the ready forward facility.
(xi) The Stocks will be eligible for “When Issued” trading during the period January 15 – January
18, 2019 in accordance with guidelines on ‘When Issued’ transactions in Central Government
Securities issued by Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018
as amended from time to time.
Yours faithfully
(Arvind Kumar)
General Manager