Executive Summary:
This document outlines an updated scheme by the Reserve Bank of India (RBI) to facilitate retail investment in Government Securities and Treasury Bills through a Non-Competitive Bidding Facility. The scheme allows retail investors to participate in select auctions of GoI securities and Treasury Bills through aggregators or by maintaining a Retail Direct Gilt Account with RBI, aiming to broaden retail participation in government securities. The updated Scheme for Non-Competitive Bidding Facility is in Annex.
Key Points / Main Content:
I. Scope and Definitions:
* Retail investors can participate in select auctions of Government of India (GoI) dated securities and Treasury Bills on a non-competitive basis.
* Retail investor: includes individuals, firms, companies, corporate bodies, institutions, provident funds, trusts, and any other entity as prescribed by RBI.
* Aggregator/Facilitator: Scheduled Banks, Primary Dealers, Specified Stock Exchanges, or any RBI-approved entity that aggregates bids from investors for submission in the non-competitive segment.
* Specified stock exchange: SEBI recognised Stock Exchange with NOC from SEBI to act as aggregator/facilitator.
* Eligible Provident Funds: are those non-government provident funds governed by the Provident Funds Act 1925 and Employees Provident Fund and Misc. Provisions Act, 1952 whose investment pattern is decided by the Government of India.
II. Eligibility:
* Retail investors who do not maintain a current account or SGL account with RBI can participate through an Aggregator/Facilitator or by maintaining a Retail Direct Gilt Account (RDG Account) with RBI.
* Exceptions:
* Regional Rural Banks (RRBs) and Cooperative Banks can participate directly in dated securities auctions due to their statutory obligations, even if they maintain SGL and current accounts with RBI.
* State Governments, eligible provident funds, Nepal Rashtra Bank, Royal Monetary Authority of Bhutan and any Person or Institution, specified by the Bank, with the approval of Government, are covered only in Treasury Bills auctions; these bids are outside the notified amount with no restriction on the maximum bid amount.
III. Quantum and Amount of Bid:
* Allocation of non-competitive bids from retail investors is capped at a maximum of 5% of the aggregate nominal amount of the issue within the notified amount, or any other percentage determined by RBI.
* The minimum bid amount is ₹10,000 face value and in multiples of ₹10,000 thereafter.
* In GoI dated securities auctions, retail investors can make a single bid for a maximum of ₹2 crore face value per security per auction.
IV. Operational Guidelines:
* Retail investors must maintain a depository account, a gilt account under the CSGL account of the Aggregator/Facilitator, or an RDG Account with RBI.
* Investors can make only one bid per auction; Aggregators/Facilitators must obtain and keep an undertaking to this effect.
* Aggregators/Facilitators submit a single consolidated non-competitive bid electronically via RBI's e-Kuber system.
* Allotment is at the weighted average yield/price from the competitive bidding.
* Securities are issued to the Aggregator/Facilitator against payment on the issue date.
* If bids exceed the reserved amount, pro-rata allotment will be done.
* Securities are issued in SGL form; Aggregators/Facilitators must indicate amounts to be credited to their SGL or CSGL account.
* Transfer of securities to clients should be completed within five working days from the issue date.
* Aggregators/Facilitators can charge up to six paise per ₹100 as brokerage/commission/service charges, which may be built into the sale price or recovered separately.
* Consideration from clients includes accrued interest from the issue date if securities are transferred subsequently.
* No other costs, such as funding costs, should be included in the price or recovered from clients.
V. Reporting Requirements:
* Aggregators/Facilitators must furnish operational information to RBI as requested, within the prescribed timeframe.
VI. Review:
* The guidelines are subject to review and modification by RBI.
Impact Analysis:
Aggregators/Facilitators (Scheduled Banks, Primary Dealers, Specified Stock Exchanges):
* Impact: They are responsible for aggregating bids from retail investors, submitting consolidated bids, allocating securities, and ensuring timely transfer to clients. They can earn brokerage/commission/service charges.
* Action Required: Establish systems for aggregating bids, submitting them electronically, managing allotments, ensuring compliance with guidelines, and reporting to RBI.
Retail Investors:
* Impact: They gain easier access to invest in Government Securities and Treasury Bills through non-competitive bidding.
* Action Required: Open a depository account, a gilt account under the CSGL account of the Aggregator/Facilitator, or an RDG Account with RBI; submit bids through aggregators or the RDG account; and comply with the bidding and payment procedures.
Reserve Bank of India (RBI):
* Impact: Oversees the scheme, allots securities, and monitors the operations of Aggregators/Facilitators.
* Action Required: Provide the e-Kuber system for bid submission, manage the allotment process, monitor Aggregator/Facilitator activities, and review/modify the scheme as needed.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking system and managing the country's currency.
RBI Retail Direct Scheme: A scheme introduced by the Reserve Bank of India to facilitate investment in Government Securities by individual investors.
Clearing Corporation of India Limited: An organization permitted to aggregate bids from retail investors in the non-competitive segment of primary auctions of Government Securities and Treasury Bills.
Government Securities: Debt instruments issued by the Government of India to finance its fiscal deficit.
Treasury Bills: Short-term debt instruments issued by the Government of India.
Scheduled Commercial Banks: Banks included in the Second Schedule of the Reserve Bank of India Act, 1934.
State Cooperative Banks: Cooperative banks operating at the state level in India.
Employees Provident Fund and Misc. Provisions Act, 1952: An act of the Parliament of India to provide for the institution of compulsory provident funds, superannuation funds and employee's state insurance for employees in factories and other establishments.
RBI/2021-2022/124
CO.IDMD.GBD(P).No.S1242/08.01.001/2021-22 November 12, 2021
All Scheduled Commercial Banks
All State Co-operative Banks / All Scheduled Primary
(Urban) Co-operative Banks / All Financial Institutions /
All Primary Dealers/All stock exchanges/
Clearing Corporation of India Ltd
Madam/ Dear Sir,
Auction of Government Securities: Non-Competitive Bidding Facility to retail investors
As part of continuing efforts to increase retail participation in government securities, the ‘RBI Retail
Direct’ Scheme to facilitate investment in Government Securities by individual investors was
introduced today. Under the scheme, Clearing Corporation of India Limited (CCIL) has been
permitted to aggregate the bids received from ‘Retail investor’ in non-competitive segment of primary
auctions of Government Securities and Treasury Bills.
2. Accordingly, the updated Scheme for Non-Competitive Bidding Facility in the auctions of
Government Securities and Treasury Bills is given in Annex.
Yours faithfully,
(Rajendra Kumar)
Chief General Manager
आंत�रक ऋण प्रबंध िवभाग, क�द्रीय काया�लय, क�द्रीय काया�लय भवन, 23 वी ंमंिज़ल, शहीद भगत िसंह माग�, मुंबई - 400 001, भारत
फोन: (022)-2266602-04; फै� : (022)-22644158, 22705125; ई-मेल: cgmidmd@rbi.org.in
िहंदी आसान है, इसका प्रयोग बढ़ाइएAnnex
Scheme for Non-Competitive Bidding Facility in the auction of
Government of India Dated Securities and Treasury Bills
I. Scope: With a view to encouraging wider participation and retail holding of
Government securities, retail investors are allowed participation on “non-
competitive” basis in select auctions of dated Government of India (GoI) securities
and Treasury Bills.
II. Definitions: For the purpose of this scheme, the terms shall bear the meaning
assigned to them as under:
a. Retail investor is any person, including individuals, firms, companies, corporate
bodies, institutions, provident funds, trusts, and any other entity as may be
prescribed by RBI.
b. ‘Aggregator/Facilitator’ means a Scheduled Bank or Primary Dealer or
Specified Stock Exchange or any other entity approved by RBI, permitted to
aggregate the bids received from the investors and submit a single bid in the
non-competitive segment of the primary auction.
c. ‘Specified stock exchange’ means SEBI recognised Stock Exchange, which
have received No Objection Certificate (NOC) from SEBI to act as
aggregator/facilitator in the primary auction segment.
d. ‘Eligible Provident Funds’ are those non-government provident funds
governed by the Provident Funds Act 1925 and Employees’ Provident Fund and
Misc. Provisions Act, 1952 whose investment pattern is decided by the
Government of India.
III. Eligibility:
(A) Participation on a non-competitive basis in the auctions will be open to a retail
investor who:
1. does not maintain current account (CA) or Subsidiary General Ledger
(SGL) account with the Reserve Bank of India; and
2. Submits the bid indirectly through an Aggregator/Facilitator permitted under
the scheme; or
3. maintains the ‘Retail Direct Gilt Account’ (RDG Account) with RBI
Exceptions:
a. Regional Rural Banks (RRBs) and Cooperative Banks:
i. Regional Rural Banks (RRBs) and Cooperative Banks shall be covered
under this Scheme only in the auctions of dated securities in view of their
statutory obligations.
ii. Since these banks maintain SGL account and current account with the
Reserve Bank of India, they shall be eligible to submit their non-
competitive bids directly.
b. State Governments, eligible provident funds and Others:
i. State Governments, eligible provident funds in India, the Nepal Rashtra
Bank, Royal Monetary Authority of Bhutan and any Person or Institution,
specified by the Bank, with the approval of Government, shall be covered
under this scheme only in the auctions of Treasury Bills.
ii. These bids will be outside the notified amount.iii. There will not be any restriction on the maximum amount of bid for these
entities.
IV. Quantum: Allocation of non-competitive bids from retail investors will be restricted
to a maximum of five percent of the aggregate nominal amount of the issue within
the notified amount as specified by the Government of India, or any other percentage
determined by Reserve Bank of India.
V. Amount of Bid:
1. The minimum amount for bidding will be ₹10,000 (face value) and thereafter in
multiples in ₹10,000 as hitherto.
2. In the auctions of GoI dated securities, the retail investors can make a single bid
for an amount not more than Rupees Two crore (face value) per security per
auction.
VI. Other Operational Guidelines:
1.The retail investor desirous of participating in the auction under the Scheme would
be required to maintain a depository account with any of the depositories or a gilt
account under the constituent subsidiary general ledger (CSGL) account of the
Aggregator/ Facilitator or ‘Retail Direct Gilt Account’ (RDG Account) with RBI.
2. Under the Scheme, an investor can make only a single bid in an auction. An
undertaking to the effect that the investor is making only a single bid will have to
obtained and kept on record by the Aggregator/Facilitator.
Submission of Bids:
3. Each Aggregator/Facilitator 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. Except in extraordinary circumstances such as general failure
of the Reserve Bank of India Core Banking Solution (E-Kuber) system, non-
competitive bid in physical form will not be accepted.
Allotment of Bids:
4. Allotment under the non-competitive segment to the Aggregator/Facilitator will be
at the weighted average rate of yield/price that will emerge in the auction on the
basis of the competitive bidding. The securities will be issued to the
Aggregator/Facilitator against payment on the date of issue irrespective of whether
they have received payment from their clients.
5. In case the aggregate amount of bid is more than the reserved amount (5% of
notified amount), pro rata allotment would be made. In case of partial allotments, it
will be the responsibility of the Aggregator/Facilitator to appropriately allocate
securities to their clients in a transparent manner.
6. In case the aggregate amount of bids is less than the reserved amount, the
shortfall will be taken to competitive portion.Issue of Security:
7. Security would be issued only in SGL form by RBI. The Aggregator/Facilitator has
to clearly indicate at the time of tendering the non-competitive bids the amounts
(face value) to be credited to their main SGL or CSGL account.
8. Delivery in physical form from the Main SGL account is permissible at the instance
of the investor subsequently.
9. It will be the responsibility of the Aggregator/Facilitator to pass on the securities
to their clients. Except in extraordinary circumstances, the transfer of securities to
the clients should be completed within five working days from the date of issue.
Commission/Brokerage charged to Clients
10. The Aggregator/Facilitator can recover up to six paise per ₹100 as
brokerage/commission/service charges for rendering this service to their clients.
Such costs may be built into the sale price or recovered separately from the clients.
11. In case, the securities are transferred subsequent to the issue date of the
security, the consideration amount payable by the client to the Aggregator/Facilitator
will include accrued interest from the date of issue.
12. Modalities for obtaining payment from clients towards cost of the securities,
accrued interest, wherever applicable, and brokerage/commission/service charges
may be worked out by the Aggregator/Facilitator as per agreement with the client.
13. It may be noted that no other costs, such as funding costs, should be built into
the price or recovered from the client.
VIII. Reporting Requirements:
Aggregators/Facilitators will be required to furnish information relating to operations
under the Scheme to the Reserve Bank of India (Bank) as may be called for from time
to time within the time frame prescribed by the Bank.
IX. The aforesaid guidelines are subject to review by the Bank and accordingly, if and
when considered necessary, the Scheme will be modified.