Annexure Scheme for
Non-competitive Bidding Facility in the Auctions of Government Securities
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. |