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In the underwriting auctions conducted on October 14, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:
Ajit Prasad Press Release: 2021-2022/1043 |
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The following State Governments have offered to sell securities by way of auction, for an aggregate amount of ₹5,000 Cr. (Face Value).
| Sr. No. | State | Amount to be raised (₹ Cr) | Additional Borrowing (Greenshoe) Option (₹ Cr) | Tenure (Yrs.) | Type of Auction |
| 1 | Gujarat | 1500 | – | 5 | Yield |
| 2 | Haryana | 1500 | – | 10 | Yield |
| 3 | Karnataka | 1000 | – | 10 | Yield |
| 1000 | – | 13 | Yield | ||
| TOTAL | 5000 |
The auction will be conducted on the Reserve Bank of India Core Banking Solution (E-Kuber) system on October 18, 2021 (Monday). The Government Stock up to 10% of the notified amount of the sale of each stock will be allotted to eligible individuals and institutions subject to a maximum limit of 1% of its notified amount for a single bid per stock as per the Scheme for Non-competitive Bidding Facility.
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 October 18, 2021 (Monday). The non-competitive bids should be submitted between 10.30 A.M. to 11.00 A.M. and the competitive bids should be submitted between 10.30 A.M. to 11.30 A.M.
In case of technical difficulties, Core Banking Operations Team (email; Phone no: 022-27595666, 022-27595415, 022-27523516) may be contacted. For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 022-22705125).
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.
The yield percent per annum expected by the bidder should be expressed up to two decimal points. An investor can submit more than one competitive bid at same/different rates of yield or 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 bidder should not exceed the notified amount for each State.
The Reserve Bank of India will determine the maximum yield /minimum price at which bids will be accepted. Securities will be issued for a minimum nominal amount of ₹10,000.00 and multiples of ₹10,000.00 thereafter.
The results of the auction will be announced on October 18, 2021 (Monday) and payment by successful bidders will be made during banking hours on October 20, 2021 (Wednesday) at Mumbai and at respective Regional Offices of RBI.
The State Government Stocks will bear interest at the rates determined by RBI at the auctions. For the new securities, interest will be paid half yearly on April 20 and October 20 of each year till maturity. The Stocks will be governed by the provisions of the Government Securities Act, 2006 and Government Securities Regulations, 2007.
The investment in State Government Stocks will be reckoned as an eligible investment in Government Securities by banks for the purpose of Statutory Liquidity Ratio (SLR) under Section 24 of the Banking Regulation Act, 1949. The stocks will qualify for the ready forward facility.
Ajit Prasad
Director
Press Release: 2021-2022/1041
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The Reserve Bank of India (RBI) has imposed, by an order dated October 13, 2021, a monetary penalty of ₹3.00 lakh (Rupees Three lakh only) on The Sahyadri Sahakari Bank Limited, Mumbai (the bank) for contravention of the provisions of Section 26A read with Section 56 of the Banking Regulation Act, 1949 (the Act), the Scheme framed thereunder and for contravention of /non-compliance with the directions issued by RBI contained in the Master Circular on Frauds – Classification and Reporting. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Act, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI. The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Background The inspection report of the bank based on its financial position as on March 31, 2019, revealed, inter alia, that the bank had (i) not transferred amount unclaimed in accounts for more than ten years to Depositor Education and Awareness Fund (DEA Fund) and (ii) had reported frauds to RBI with an inordinate delay. Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with and contravention of the provisions of the Act and the aforesaid directions, as stated therein. After considering the bank’s reply to the Notice and oral submissions made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with and contravention of the provisions of the Act and RBI directions were substantiated and warranted imposition of monetary penalty. (Yogesh Dayal) Press Release: 2021-2022/1040 |
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The Government of India announces the conversion/switch of its securities through auction for an aggregate amount of ₹36,000 crore (face value). The security-wise details of the conversion/switch are given as under:
| Date of Auction | Source Securities | Amount (FV) of Source Securities | Destination Securities |
| October 18, 2021 | 5.09% GS 2022 (Maturing on Apr 13, 2022) |
₹8,000 crore | FRB 2031 (maturing on Dec 07, 2031) |
| ₹6,000 crore | FRB 2034 (maturing on Oct 30, 2034) |
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| ₹6,000 crore | FRB 2028 (maturing on Oct 04, 2028) |
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| 8.08% GS 2022 (Maturing on Aug 02, 2022) |
₹7,000 crore | FRB 2031 (maturing on Dec 07, 2031) |
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| ₹5,000 crore | FRB 2034 (maturing on Oct 30, 2034) |
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| ₹4,000 crore | FRB 2028 (maturing on Oct 04, 2028) |
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| Total | ₹36,000 crore |
The market participants are required to place their bids in e-Kuber giving the amount of the source security and the price of the source and destination security expressed up to two decimal places.
The auction would be a multiple-price based auction, i.e. successful bids will get accepted at their respective quoted prices for the source and destination securities.
Bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (e-Kuber) system on October 18, 2021 (Monday) between 12:00 noon to 01:00 PM. The result of the auction will be announced on the same day and settlement will take place on October 20, 2021 (Wednesday).
Government of India reserves the right to:
Accept offers for less than the notified amount.
Purchase marginally higher than the notified amount due to rounding-off effect.
Accept or reject any or all the offers either wholly or partially without assigning any reason.
Operational guidelines for switch transactions and other details are given in the Annex.
(Yogesh Dayal)
Chief General Manager
Press Release: 2021-2022/1038
Operational Guidelines for Switch/Conversion Transactions with the Government of India
Switch module on e-kuber
1. The market participants can bid in the switch auction through the Switch Transaction module provided in the e-kuber portal.
Bidding in a switch transaction
2. Bidding in the auction implies that the market participants agree to sell the source security/ies to the Government of India (GoI) and simultaneously agree to buy the destination security from the GoI at their respective quoted prices.
Placing of bids
3. Each bid should specify the following details:
Amount of the source security (Face Value) that the participants are willing to sell.
Price of the source security (expressed up to two decimal places).
Choice of destination security and the price of the destination security (expressed up to two decimal places), at which the participants are willing to buy the destination security.
4. The participants can choose to bid for any/all the destination security/ies, but the aggregate amount of bids for the source security should not exceed their holdings of the source security in face value terms.
Minimum Bid size
5. Minimum bid size would be ₹10,000 and in multiples of ₹10,000 thereafter. The participants are allowed to submit multiple bids. However, the aggregate amount of bids submitted should not exceed the notified amount of source security/basket of source securities in the auction.
Price of source security
6. The price of the source security quoted must be equal to the FBIL closing price of the source security as on the previous working day.
7. Bids for source security not as per the price mentioned above will be rejected.
Price of destination security
8. Bids for the destination security may be placed after taking into account the price of source security as mentioned above.
Method of auction
9. The auction will be a multiple-price based auction, i.e. successful bids will get accepted at their respective quoted prices for the source and destination securities.
Auction decision
10. The auction cut-off will be decided based on the price of the destination security/ies.
11. Successful bidders are those who have placed their bids at or above the cut-off price. All bids lower than the cut-off price will be rejected.
12. There will be provision of pro-rata allotment, should there be more than one successful bid at the cut-off price.
Amount of destination security and dealing in odd amounts during switch auction
13. The switch ratio, which is the ratio of the price of the source security to the price of the destination security, would be rounded off at 8 decimal places.
14. The amount of destination security to be issued for each successful bid will be computed by multiplying the allotted amount (FV) of the source security with the rounded-off switch ratio. The amount of destination security (FV) would be rounded-off to the nearest lower value in multiples of ₹10,000.
15.The odd amount of destination securities (less than ₹10,000) which has been rounded-off, would be notionally allotted and bought back from the bidders at the quoted bid price of the destination security. The net cash consideration to be paid to the bidder for such odd amounts would be the clean price of these securities (as the accrued interest received during notional allotment and paid during notional buyback offset each other).
Fund settlement
16. Though the conversion would be broadly cash neutral, there will be fund settlement for the net accrued interest (accrued interest for the source security FV – accrued interest for the destination security FV) for each bid. Cash consideration (due to rounding-off of face value of destination security) computed for each bid would be added to the net accrued interest. Accordingly, fund settlement will be done for the final amount (Net accrued interest + cash consideration) for each bid.
Note: An illustration for the calculation of cash consideration due to rounding-off of destination security face value is as given below:
| Amount of Source Security (FV) | ₹10,00,00,000.00 |
| Price of Source Security | ₹97.50 |
| Price of Destination Security | ₹99.20 |
| Switch Ratio (rounded-off at 8 decimals) | 0.98286290 |
| Destination Security FV before rounding off | ₹9,82,86,290.00 |
| Destination Security FV re-issued after rounding-off | ₹9,82,80,000.00 |
| Odd amount of rounded-off destination security (FV) | ₹6290.00 |
| Cash consideration due to rounding off (Clean Price calculated at the quoted price of destination security) | ₹6240.00 |
17. The settlement of the auction would be held on T+1 basis.
Help Desk
18. In case of technical difficulties, Core Banking Operations Team should be contacted (email; Phone no: 022-27595415, 27595666, 27523516). For other auction related difficulties, IDMD auction team can be contacted (email; Phone no: 022-22702431, 22705125).
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Ajit Prasad Press Release: 2021-2022/1037 |
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Ajit Prasad Press Release: 2021-2022/1036 |
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Government of India has announced the sale (re-issue) of Government Stock detailed below through auctions to be held on October 14, 2021 As per the extant scheme of underwriting notified on November 14, 2007, the amounts of Minimum Underwriting Commitment (MUC) and the minimum bidding commitment under Additional Competitive Underwriting (ACU) for the underwriting auction, applicable to each Primary Dealer (PD), are as under:
The underwriting auction will be conducted through multiple price-based method on October 14, 2021 (Thursday). PDs may submit their bids for ACU auction electronically through Core Banking Solution (E- Kuber) System between 09.00 A.M. and 09.30 A.M. on the date of underwriting auction. The underwriting commission will be credited to the current account of the respective PDs with RBI on the date of issue of securities. Ajit Prasad Press Release: 2021-2022/1035 |
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