What changed
Previously, each PD had to bid for at least 3% of the notified amount in the ACU auction. Now, the minimum bid in the ACU auction is set equal to the PD's MUC, which is a fixed rupee amount based on the total MUC divided equally among PDs.
What it means for you
This change aligns the ACU minimum bid with the MUC, reducing the total underwriting commitment for all PDs from 5358 crore to 5016 crore in the illustration. It simplifies bidding requirements and may lower the aggregate risk for PDs, as the minimum bid per PD decreases from 150 crore to 132 crore in the example.
What you must do
- Update your internal bidding guidelines to reflect that the minimum bid in ACU auctions is now your firm's MUC amount.
- Ensure your treasury team recalculates bid limits based on the revised formula.
- Review the illustrative annex in the circular to confirm your PD's new minimum commitment.
- Communicate the change to your dealing room and compliance teams immediately.
Who it affects
All Primary Dealers in the Government Securities Market, Scheduled commercial banks undertaking PD business departmentally
What is the new minimum bid amount for a PD in the ACU auction?
The minimum bid is now equal to the PD's Minimum Underwriting Commitment (MUC), not 3% of the notified amount as before.
Does this change affect underwriting commission or other terms?
No, the basis for payment of underwriting commission and other terms remain unchanged.