Non-Competitive Bidding for State Development Loans from Aug 25, 2009
Current · Source: Reserve Bank of India · RBI/2009-10/128 · issued 24 Aug 2009 · ~2 min read
Quick answerRBI introduces non-competitive bidding for State Development Loans from August 25, 2009. NDS members can submit one consolidated electronic bid per auction, with each non-competitive bid capped at 1% of notified amount. Reserved amount is 10% of notified amount; excess bids get pro-rata allotment.
What changed
RBI, in consultation with state governments, launched a non-competitive bidding facility for State Development Loans starting August 25, 2009. NDS members can now submit a single consolidated electronic bid on behalf of clients, but must maintain detailed records and subject these bids to concurrent audit. Each non-competitive bidder is limited to one bid not exceeding 1% of the notified amount, and if total bids exceed the reserved 10% of notified amount, allotment is pro-rata.
What it means for you
This scheme broadens retail and small investor access to state government securities by allowing non-competitive bids through NDS members. Banks and primary dealers must ensure transparent allocation of securities in case of partial allotments. The move aims to deepen the state government bond market and improve participation from smaller entities.
What you must do
Submit a single consolidated electronic non-competitive bid per auction on behalf of constituents via NDS.
Maintain complete records of all non-competitive bids and subject them to concurrent audit.
Ensure each non-competitive bidder submits only one bid not exceeding 1% of the notified amount.
Allocate securities transparently to clients in case of pro-rata or partial allotments.
Who it affects
All NDS members (banks and primary dealers), Non-competitive bidders (retail and small investors), State governments issuing SDLs
❓ Common questions
What is the maximum bid amount for a non-competitive bidder?
Each non-competitive bidder can submit only one bid, and that bid cannot exceed 1% of the notified amount for that auction.
How is allotment handled if total non-competitive bids exceed the reserved amount?
The reserved amount is 10% of the notified amount. If aggregate bids exceed this, allotment is made on a pro-rata basis. Banks or primary dealers must allocate securities transparently to clients in case of partial allotments.
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/128
IDMD.No. 954 /08.03.001/2009-10
August 24, 2009
All NDS Members
Dear Sir / Madam,
Scheme of Non-Competitive Bidding Facility in the Auctions of State Development Loans
Please refer to our press release 2009-2010/293 dated August 21, 2009 on the operationalisation of the Scheme of Non-Competitive Bidding Facility in the Auctions of State Development Loans.
2. The Reserve Bank of India, in consultation with the State Governments, has decided to introduce the Non-Competitive Bidding in the Auction of State Development Loans from August 25, 2009 onwards.
3. NDS members may submit a single consolidated bid electronically in respect of non-competitive bids on behalf of constituents / non-constituents. However, a complete record of the details of non-competitive bids may be maintained by them and such bids should be subjected to concurrent audit to ensure that the participants under the Scheme comply with the terms and conditions of the Non-competitive Bidding Scheme in the auction of State Government Securities. It may also be ensured that non-competitive bidders submit a single bid only, not exceeding 1 % of the notified amount. If the aggregate amount of bids is more than the reserved amount (10% of notified amount), pro rata allotment would be made. In case of partial allotments, it shall be the responsibility of the bank or the Primary Dealer concerned to appropriately allocate securities to their clients in a transparent manner.
4. The changes in the auction procedures shall be operational with effect from the auction to be held on August 25, 2009.
Yours faithfully
(K.V. Rajan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/128 · issued 24 Aug 2009. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All NDS members (banks and primary dealers), Non-competitive bidders (retail and small investors), State governments issuing SDLs), your first concrete step on “Non-Competitive Bidding for State Development Loans from Aug 25, 2009” is: “Submit a single consolidated electronic non-competitive bid per auction on behalf of constituents via NDS.” (RBI issued this 24 Aug 2009).
Circular: RBI/2009-10/128 -- Non-Competitive Bidding for State Development Loans from Aug 25, 2009
Issued: 24 Aug 2009
Action required: Submit a single consolidated electronic non-competitive bid per auction on behalf of constituents via NDS.
Action required: Maintain complete records of all non-competitive bids and subject them to concurrent audit.
Action required: Ensure each non-competitive bidder submits only one bid not exceeding 1% of the notified amount.
Action required: Allocate securities transparently to clients in case of pro-rata or partial allotments.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5230&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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