Auction of Government of India Dated Securities: Detailed Overview

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Auction of Government of India Dated Securities: Detailed Overview
Auction of Government of India Dated Securities (Logo of RBI from Public Domain)

The Government of India (GOI) has announced the sale (issue/re-issue) of three dated securities to raise funds for various developmental and financial activities. These securities are integral to the country’s debt management strategy. Here are the comprehensive details:

The Securities Up for Auction

New GS 2029

  • Date of Repayment: June 03, 2029
  • Notified Amount: ₹12,000 crore
  • GoI Specific Notification: F.No.4(3)-B(W&M)/2024 dated May 27, 2024
  • Auction Date: May 31, 2024 (Friday)
  • Settlement Date: June 03, 2024 (Monday)

New GOI SGrB 2034

  • Date of Repayment: June 03, 2034
  • Notified Amount: ₹6,000 crore

7.34% GS 2064

  • Date of Repayment: April 22, 2064
  • Notified Amount: ₹11,000 crore

Key Points to Note

Additional Subscription Option

  • The GOI has the option to retain additional subscriptions up to ₹2,000 crore against each security mentioned above. This flexibility allows the government to adjust the issuance based on market demand.

Sale Process

  • The securities will be sold through the Reserve Bank of India (RBI) Mumbai Office, located in Fort, Mumbai – 400001.
  • The sale is subject to the terms and conditions specified in the ‘Specific Notification’ mentioned earlier and the General Notification F.No.4(2)–W&M/2018, dated March 27, 2018.

Auction Methodology

  • The auction will employ the multiple price method for New GS 2029, New GOI SGrB 2034, and 7.34% GS 2064.
  • Both competitive and non-competitive bids should be submitted electronically via the Reserve Bank of India Core Banking Solution (E-Kuber) system.
  • Non-competitive bids must be submitted between 10:30 a.m. and 11:00 a.m., while competitive bids should be submitted between 10:30 a.m. and 11:30 a.m..
  • The auction results will be announced on the same day, and successful bidders must make payments by June 03, 2024 (Monday).

Operational Guidelines and Additional Details

Type of Auction

  • For multiple price-based auctions, successful bids will be accepted at the respective quoted yield/price for the security.
  • For uniform price-based auctions, bids will be accepted at the cut-off yield/price accepted in the auction.
  • The auction will be yield-based for new security and price-based for securities which are re-issued.

Minimum Bid Size

  • The stocks will be issued for a minimum amount of ₹10,000/- (nominal) and in multiples of ₹10,000/- thereafter.

Non-Competitive Segment

  • Government stock up to 5% of the notified amount of sale will be allotted to eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities.
  • Individual investors can place bids through the Retail Direct portal (https://rbiretaildirect.org.in).
  • Each bank or Primary Dealer (PD) will submit a single consolidated non-competitive bid on behalf of all its constituents electronically on the E-Kuber system.
  • Allotment under the non-competitive segment to the bank or PD will be at the weighted average rate of yield/price of the successful bids that emerge in the auction based on competitive bidding.

Submission of Bids

  • Both competitive and non-competitive bids for the auction should be submitted electronically on the E-Kuber system.
  • Bids in physical form will not be accepted except in extraordinary circumstances.

Business Continuity Plan (BCP) - IT Failure

  • Only in the event of system failure, physical bids will be accepted. Such physical bids should be submitted to the Public Debt Office, Mumbai via email or phone (022-22603456, 022-22603457, 022-22603190).
  • In case of technical difficulties, contact the Core Banking Operations Team via email or phone (022-69870466, 022-69870415).
  • For auction-related difficulties, contact the IDMD auction team via email or phone (022-22702431, 022-22705125).

Multiple Bids

  • An investor can submit more than one competitive bid electronically on the E-Kuber system.
  • The aggregate amount of bids submitted by an investor in an auction should not exceed the notified amount of auction.

Decision Making Process

  • Based on the bids received, the Reserve Bank will determine the minimum price/maximum yield up to which tenders for purchase of Government Stock will be accepted at the auctions.
  • Bids quoted at rates lower than the minimum price/higher than the maximum yield determined by the Reserve Bank of India will be rejected.
  • The RBI retains full discretion to accept or reject any or all bids, either wholly or partially, without assigning any reason.

Issue of Securities

  • Issue of securities to the successful bidders will be by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such an account with the Reserve Bank of India or in the form of a Stock Certificate.

Periodicity of Interest Payment

  • Interest on the Government Stock will generally be paid half-yearly other than in the case of securities with non-standard maturities. The exact periodicity of coupon payment is invariably mentioned in the specific notification for the issue of security.

Underwriting of the Government Securities

  • The underwriting of Government Securities under auctions by the Primary Dealers will be as per the “Revised Scheme of Underwriting Commitment and Liquidity Support” announced by the Reserve Bank vide circular RBI/2007-08/186 dated November 14, 2007, as amended from time to time.

Eligibility for Repurchase Transactions (Repo)

  • The stocks will be eligible for Repurchase Transactions (Repo) as per the conditions mentioned in the Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 as amended from time to time.

Eligibility for ‘When Issued’ Trading

  • The stocks will be eligible for “When Issued” trading in accordance with the guidelines on ‘When Issued transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI/2018-19/25 dated July 24, 2018, as amended from time to time.

Investment by Non-Residents

  • Investments by Non-Residents are subject to the guidelines on the ‘Fully Accessible Route’ for Investment by Non-residents in Government Securities and other related guidelines as issued by the Reserve Bank from time to time.

Key Takeaway

  • The Government of India is auctioning three securities worth ₹29,000 crore, with a possible additional subscription of up to ₹6,000 crore.
  • Auctions will be conducted using a multiple price method, with results announced on the same day.
  • Bids are submitted electronically via the E-Kuber system, with specific time windows for non-competitive and competitive bids.
  • The securities are eligible for various financial transactions, including repurchase agreements and ‘When Issued’ trading.
  • Non-Resident investors can participate in these auctions under specific guidelines provided by the RBI.

Overview of Auctions

DetailsNew GS 2029New GOI SGrB 20347.34% GS 2064
Date of RepaymentJune 03, 2029June 03, 2034April 22, 2064
Notified Amount₹12,000 crore₹6,000 crore₹11,000 crore
Additional Subscription OptionUp to ₹2,000 croreUp to ₹2,000 croreUp to ₹2,000 crore
Auction DateMay 31, 2024 (Friday)May 31, 2024 (Friday)May 31, 2024 (Friday)
Settlement DateJune 03, 2024 (Monday)June 03, 2024 (Monday)June 03, 2024 (Monday)
Auction MethodMultiple price methodMultiple price methodMultiple price method
Submission of BidsE-Kuber systemE-Kuber systemE-Kuber system
Non-competitive Bid Timing10:30 a.m. - 11:00 a.m.10:30 a.m. - 11:00 a.m.10:30 a.m. - 11:00 a.m.
Competitive Bid Timing10:30 a.m. - 11:30 a.m.10:30 a.m. - 11:30 a.m.10:30 a.m. - 11:30 a.m.
Results AnnouncementMay 31, 2024May 31, 2024May 31, 2024
Minimum Bid Size₹10,000 and multiples thereof₹10,000 and multiples thereof₹10,000 and multiples thereof
Eligible for ‘When Issued’ TradingYes (May 28 - May 31, 2024)Yes (May 28 - May 31, 2024)Yes (May 28 - May 31, 2024)
Eligibility for Repurchase Transactions (Repo)YesYesYes
Investment by Non-ResidentsSubject to ‘Fully Accessible Route’ guidelinesSubject to ‘Fully Accessible Route’ guidelinesSubject to ‘Fully Accessible Route’ guidelines

Key Auction Guidelines and Details

AspectDetails
Auction LocationRBI Mumbai Office, Fort, Mumbai – 400001
General Notification ReferenceF.No.4(2)–W&M/2018, dated March 27, 2018
Operational GuidelinesDetailed in Annex
Physical Bids AcceptanceOnly in case of system failure
Bids Submission in System FailureVia email/phone to Public Debt Office, Mumbai
System Failure ContactPhone: 022-22603456, 022-22603457, 022-22603190
Technical Difficulties ContactPhone: 022-69870466, 022-69870415
Auction Related Difficulties ContactPhone: 022-22702431, 022-22705125
Issue of SecuritiesCredit to Subsidiary General Ledger Account (SGL) or Stock Certificate
Periodicity of Interest PaymentGenerally half-yearly
Underwriting by Primary DealersAs per “Revised Scheme of Underwriting Commitment and Liquidity Support”
Minimum Price/Maximum Yield DecisionDetermined by RBI
Eligibility for Non-Competitive SegmentUp to 5% of notified amount

Important Dates

EventDate
Auction DateMay 31, 2024 (Friday)
Settlement DateJune 03, 2024 (Monday)
Non-competitive Bid Timing10:30 a.m. - 11:00 a.m.
Competitive Bid Timing10:30 a.m. - 11:30 a.m.
Results AnnouncementMay 31, 2024
‘When Issued’ Trading PeriodMay 28 - May 31, 2024

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