RBI to auction state govt securities worth ₹14,000 cr on Aug 29. Key highlights
2 min read . Updated: 25 Aug 2022, 08:21 PM IST
Premium- Through the auction, the Andhra Pradesh government plans to raise ₹2,000 crore, while Bihar to raise ₹1,000 crore, Haryana to raise ₹1,500 crore, Kerala to raise ₹3,000 crore, Punjab to raise ₹2,500 crore, and Tamil Nadu government to raise ₹4,000 crore.
The Reserve Bank of India (RBI) will be auctioning state government securities aggregating to ₹14,000 crore on August 29. States like Andhra Pradesh, Bihar, Haryana, Kerala, Punjab, and Tamil Nadu will be offering stock through this auction. Both competitive and non-competitive bids for the auction are required to be submitted in electronic form via RBI's core banking solution (E-Kuber) system.
The state government securities have a tenure ranging from a minimum of 8 years to a maximum of 20 years.
Through the auction, the Andhra Pradesh government plans to raise ₹2,000 crore, while Bihar to raise ₹1,000 crore, Haryana to raise ₹1,500 crore, Kerala to raise ₹3,000 crore, Punjab to raise ₹2,500 crore, and Tamil Nadu government to raise ₹4,000 crore.
As per RBI's statement, up to 10% of the notified amount of the sale of each government 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. Individual investors can also place bids as per the non-competitive scheme through the Retail Direct portal.
Also, RBI stated that the new State Government Stocks will bear interest at the rates determined by RBI at the auctions. For the new stock, interest will be paid half yearly on February 28 and August 30 of each year till maturity. For the re-issued Government Stock, interest will be paid at the rate as determined on the date of the original issue of Government Stock and will be paid on half yearly basis till maturity.
On August 29, the competitive bids should be submitted between 10.30 am and 11.30 am and non-competitive bids should be submitted between 10.30 am and 11.00 am.
"Only in the event of system failure, physical bids would be accepted," RBI said.
RBI highlighted that 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 the same/different rates of yield or prices in electronic format on RBI's E-Kuber system. However, the aggregate amount of bids submitted by a bidder should not exceed the notified amount for each State.
RBI will determine the maximum yield /minimum price at which bids will be accepted. Stock will be issued for a minimum nominal amount of ₹10,000 and multiples of ₹10,000 thereafter.
The results of the auction will be announced on August 29 and payment by successful bidders will be made during banking hours on August 30 in Mumbai and at the respective Regional Offices of RBI.
