I.
Scope : With a view to encouraging wider participation and retail holding
of Government securities it is proposed to allow participation on "non-competitive"
basis in select auctions of dated Government of India (GoI)securities.
Accordingly, non-competitive bids up to 5 percent of the notified amount
will be accepted in the auctions of dated securities. The reserved amount will
be within the notified amount.
II. Eligibility:
Participation on a non-competitive basis in the auctions of dated GOI securities
will be open to investors who satisfy the following:
1.
do not maintain current account (CA) or Subsidiary General Ledger (SGL)
account with the Reserve Bank of India.
Exceptions: Regional
Rural Banks (RRBs) and Cooperative Banks shall be covered under this Scheme in
view of their statutory obligations.
2. make a single bid
for an amount not more than Rs. two crore (face value) per auction
3.
submit their bid indirectly through any one bank or PD offering
this scheme.
Exceptions: Regional Rural Banks (RRBs)
and Cooperative Banks that maintain SGL account and current account with the Reserve
Bank of India shall be eligible to submit their non competitive bids directly.
III.
Coverage: Subject to the conditions mentioned above, participation on "non-competitive"
basis is open to any person including firms, companies, corporate bodies, institutions,
provident funds, trusts, and any other entity as may be prescribed by RBI. The
minimum amount for bidding will be Rs.10,000 (face value) and thereafter in multiples
in Rs.10,000 as hitherto for dated stocks.
IV. Other
Operational Guidelines:
1. It will not be mandatory
for the retail investor to maintain a constituent subsidiary general ledger (CSGL)
account with the bank or PD through whom they wish to participate. However, an
investor can make only a single bid under this scheme. An undertaking to the effect
that the investor is making only a single bid will have to be obtained and kept
on record by the bank or PD.
2. Each bank or PD on the
basis of firm orders received from their constituents may submit application wise
bids through NDS. The firm orders received from others (i.e. non-constituents)
may be submitted in physical application forms to the PDO. The physical application
may be a single bid for the aggregate amount of all the customers. Particulars
of individual customer viz. name and amount shall be provided as an Annex to the
bid.
3. Allotment under the non-competitive segment
to the bank or PD will be at the weighted average rate of yield/price that will
emerge in the auction on the basis of the competitive bidding. The securities
will be issued to the bank or PD against payment on the date of issue irrespective
of whether the bank or PD has received payment from their clients.
4.
In case the aggregate amount of bid is more than the reserved amount (5% of notified
amount), pro rata allotment would be made. In case of partial allotments, it will
be the responsibility of the bank or PD to appropriately allocate securities to
their clients in a transparent manner.
5. In case
the aggregate amount of bids is less than the reserved amount, the shortfall will
be taken to competitive portion.
6. Security would be issued
only in SGL form by RBI. RBI would credit either the main SGL account or
the CSGL account of the bank or PD as indicated by them. The facility for affording
credit to the main SGL account is for the sole purpose of servicing investors
who are not their constituents. Therefore, the bank or PD would have to indicate
clearly at the time of tendering the non-competitive bids the amounts (face
value) to be credited to their SGL account and the CSGL account. Delivery
in physical form from the main SGL account is permissible at the instance of the
investor subsequently.
7. It will be the responsibility
of the bank or the PD to pass on the securities to their clients. Except in extraordinary
circumstances, the transfer of securities to the clients shall be completed within
five working days from the date of issue.
8. The
bank or PD can recover upto six paise per Rs.100 as brokerage/commission/service
charges for rendering this service to their clients. Such costs may be built into
the sale price or recovered separately from the clients. In case the transfer
of securities is effected subsequent to the issue date of the security, the consideration
amount payable by the client to the bank or PD would also include accrued interest
from the date of issue.
9. Modalities for obtaining payment
from clients towards cost of the securities, accrued interest wherever applicable
and brokerage/commission/service charges may be worked out by the bank or PD as
per agreement with the client. It may be noted that no other costs such as funding
costs should be built into the price or recovered from the client.
V.
Banks and PDs will be required to furnish information relating to operations under
the Scheme to the Reserve Bank of India (Bank) as may be called for from time
to time within the time frame prescribed by the Bank.
VI.
The aforesaid guidelines are subject to review by the Bank and accordingly, if
and when considered necessary, the Scheme will be modified.