Category: RBI News

Government of India (GOI) has announced the sale (re-issue) of three dated securities for a notified amount of ₹26,000 crore as per the following details:

2. GoI will have the option to retain additional subscription up to ₹6,000 crore against above security/securities.

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

4. 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 April 30, 2021. The non-competitive bids should be submitted between 10.30 a.m. and 11.00 a.m. and the competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. The result will be announced on the same day and payment by successful bidders will have to be made on May 03, 2021 (Monday).

5. Bids for underwriting of the Additional Competitive Underwriting (ACU) portion can be submitted by ‘Primary Dealers’ from 9.00 a.m. up to 9.30 a.m. on April 30, 2021 (Friday) on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

6. The Stocks will be eligible for “When Issued” trading for a period commencing from April 27, 2021 – April 30, 2021.

7. Operational guidelines for Government of India dated securities auction and other details are given in the Annex.

Rupambara
Director   

Press Release: 2021-2022/113

ANNEX

Type of Auction

1. The auction will be a multiple price-based auction i.e. successful bids will get accepted at their respective quoted price for the security.

2. The auction will be yield based for new security and price based for securities which are re-issued.

3. In case of a Floating Rate Bonds (FRB), the auction will be spread-based for new security and price based for securities which are reissued. At the time of placing bids for new FRB, the spread should be quoted in percentage terms.

Minimum Bid Size

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

Non-Competitive Segment

5. 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.

6. Each bank or Primary Dealer (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.

7. 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 will emerge in the auction on the basis of the competitive bidding.

Submission of Bids

8. 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.

9. Bids in physical form will not be accepted except in extraordinary circumstances.

Business Continuity Plan (BCP)-IT failure

10. Only in the event of system failure, physical bids will be accepted. Such physical bids should be submitted to the Public Debt Office, Mumbai through (email; Phone no: 022-22632527, 022-22701299) in the prescribed form which can be obtained from RBI website (https://www.rbi.org.in/Scripts/BS_ViewForms.aspx) before the auction timing ends.

11. In case of technical difficulties, Core Banking Operations Team should be contacted (email; Phone no: 022-27595666, 022-27595415, 022-27523516).

12. For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).

Multiple Bids

13. An investor can submit more than one competitive bid in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system.

14. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.

Decision Making Process

15. 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.

16. Bids quoted at rates lower than the minimum price determined by the Reserve Bank of India will be rejected.

17. 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.

Issue of Securities

18. Issue of securities to the successful bidders will be 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.

Periodicity of Interest Payment

19. Interest on the Government Stock will generally be paid half-yearly other than in 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

20. The underwriting of the 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)

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

Eligibility for ‘When Issued’ Trading

22. 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

23. Investments by Non-Residents are subject to the guidelines on ‘Fully Accessible Route’ for Investment by Non-residents in Government Securities and Investment by Foreign Portfolio Investors (FPI) in Government Securities: Medium Term Framework (MTF).

The Reserve Bank of India today released the April 2021 issue of its monthly Bulletin. The Bulletin includes Monetary Policy Statement, 2021-22, Resolution of the Monetary Policy Committee (MPC) April 5-7, 2021, Monetary Policy Report – April 2021, one Speech, four Articles and Current Statistics.

The four articles are: I. State of the Economy; II. ARCs in India: A Study of their Business Operations and Role in NPA Resolution; III. The Relationship between Capacity Utilisation and Inflation: A Study of Indian Manufacturing Sector; and IV. Retail Payment Habits in India – Evidence from a Pilot Survey.

I. State of the Economy

As India battles the ferocious rise of new infections, a strong policy response is building. Economic activity in India is holding up against COVID -19’s renewed onslaught. Apart from contact-intensive sectors, activity indicators largely remained resilient in March and grew beyond pre-pandemic levels. The resurgence in COVID-19, if not contained in time, risks protracted restrictions and disruptions in supply chains with consequent inflationary pressures. Pandemic protocols, speedier vaccination, ramping up hospital and ancillary capacity, and remaining resolutely focused on a post pandemic future of strong and sustainable growth with macroeconomic and financial stability is the way forward.

II. ARCs in India: A Study of their Business Operations and Role in NPA Resolution

Asset reconstruction companies (ARCs) are important players in the asset resolution mechanism in India. Unlike many other countries that experimented with a public sector model of asset management companies marked by their existence for a pre-defined period following banking crises or crises-like situations, India introduced ARCs as private sector institutions as part of its ongoing financial sector reforms.

Highlights:

• Notwithstanding the increase in the number of ARCs over time, there has been a concentration in the ARC industry in terms of the assets under management, and the security receipts (SRs) issued.

• Despite the policy push to broaden and enhance the capital base of these companies, they have remained reliant primarily on domestic sources of capital, particularly banks.

• The cost of acquisition to book value ratio, although posting a slow rise, remains low and is marked by wide variations across ARCs and economic sectors.

• The ARCs have predominantly resorted to rescheduling of payment obligations as a method of resolution.

• There is considerable concentration of older SRs in the books of the ARCs.

III. The Relationship between Capacity Utilisation and Inflation: A Study of Indian Manufacturing Sector

This article attempts to assess the efficacy of the capacity utilisation (CU) in the manufacturing sector in predicting inflation path.

Highlights:

• The Order Books, Inventories and Capacity Utilisation Survey (OBICUS) based CU rate in the manufacturing sector provides useful insights into demand conditions in the economy.

• The article computes a long time series of CU using an alternate (Wharton) method to study the cyclical pattern in CU and its relationship with price change.

• The study finds that the relationship between CU and WPI-manufacturing based inflation varies with time and aggregate level CU needs to be interpreted prudently for gauging future path of manufacturing inflation.

IV. Retail Payment Habits in India – Evidence from a Pilot Survey

The article presents the results of a pilot survey on retail payment habits of individuals in six cities between December 2018 and January 2019 with a focus on the awareness and usage of digital payments.

Highlights:

• The survey results indicated a widespread awareness about digital payments among respondents, with the point in favour of digital payment being its convenience.

• Econometric assessment suggested that awareness was positively associated with ownership of bank accounts, levels of literacy and income of the users.

• More importantly, the survey results indicated the need for imparting greater awareness among the general public regarding basic safety norms while using digital modes of payment.

From the next issue onwards, the RBI’s monthly Bulletin will be released around the 15th of every month.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/112