What changed
Government announced re-issue of two dated securities: 7.37% Stock 2014 (Rs 6,000 crore) and 10.25% Stock 2021 (Rs 4,000 crore) through price-based multiple price auctions. Non-competitive bidding facility is available for up to 5% of notified amount for eligible individuals and institutions. Bids must be submitted by 12:30 PM on June 6, 2005, with payment due by 2:30 PM on June 7, 2005.
What it means for you
Banks and primary dealers need to prepare for two simultaneous auctions, ensuring timely submission of competitive and non-competitive bids. The multiple price method means each accepted bidder pays their own quoted price, which can affect yield calculations and portfolio strategies. NDS members must use the electronic PMO module, while others submit sealed tenders. The 5% non-competitive quota provides a small cushion for retail and institutional investors.
What you must do
- Submit competitive bids in sealed covers or via NDS PMO module by 12:30 PM on June 6, 2005, with price expressed to two decimal points.
- Ensure non-competitive bids are submitted separately in prescribed forms (Annexure I(a)/II(a)) by the same deadline.
- Arrange payment for allotted securities by 2:30 PM on June 7, 2005, via cash, cheque, banker's pay order, or debit to RBI current account.
- Verify that aggregate bids per investor do not exceed the notified amount of the auction.
- For multiple bids at different prices, submit separate applications for each bid.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), All State Co-operative Banks, All Scheduled Primary (Urban) Co-operative Banks, All Financial Institutions, All Primary Dealers, Eligible individuals and institutions for non-competitive bidding
What is the minimum bid amount for these auctions?
The minimum bid amount is Rs 10,000 (nominal) and in multiples of Rs 10,000 thereafter.
Can I submit multiple bids at different prices?
Yes, an investor can submit more than one bid at different prices, but each bid requires a separate application. The total of all bids from one person must not exceed the notified amount of the auction.
How will successful bidders pay for the allotted securities?
Payment must be made by 2:30 PM on June 7, 2005, in cash, by cheque on your RBI Mumbai account, or by banker's pay order payable at Mumbai. Current account holders will have their accounts debited.