1. Government of India have offered to sell Floating Rate
Bonds (FRB) of 8 year tenure, for a notified amount of Rs 6,000 crore through
auction using uniform price format. The bonds will carry an interest
rate, calculated by adding a 'spread' to a variable base rate.
The 'spread' will be decided in the auction to be conducted by Reserve
Bank of India and will remain unchanged during the currency of the bonds. The
variable base rate will be the average rate of the implicit yields at cut-off
prices emerging in the three auctions of ‘Government of India 364 day
Treasury Bills’ immediately preceding the relative annual coupon reset date.
The base rate for calculation of interest for the first year, i.e., from
August 8, 2003 to August 7, 2004 as per the aforesaid formula is 4.90 per cent
per annum. The base rate for the subsequent annual coupon periods, worked out
as per the aforesaid formula, will be announced by RBI on or before the
commencement of the respective coupon period. Interest will be paid on half
yearly basis. There will be no floor or cap on the interest rate on the
Floating Rate Bonds.
2. Government of India have also announced the sale of a
new 25 year Stock for a notified amount of Rs 3,000 crore (nominal) through a yield
based auction using multiple price method. The tenure of the Stock
will notionally commence from March 25, 2003 and the interest on the Stock
will be paid every half-year on September 25 and March 25. The payment for the
Stock by the successful bidders in the auction will include accrued interest
on the nominal value of the Stock from the notional commencement date of
tenure of the Stock i.e., March 25, 2003 to August 7, 2003 at the coupon rate
emerging in the auction.
3. Up to 5% of the notified amount of the sale of both
the securities will be allotted to eligible individuals and
institutions as per the Scheme for Non-Competitive Bidding Facility in the
auction of Government Securities.
4. The auctions will be conducted by the Reserve Bank of
India, Mumbai Office, Fort, Mumbai on Thursday, August 7, 2003. Both the
securities will be issued at par (i.e. at Rs 100.00 per cent) for a minimum
amount of Rs 10,000/- (face value) and in multiples of Rs 10,000/- thereafter.
5. Interested persons may submit bids in the prescribed
form obtainable from the Regional Director, RBI, Public Debt Office, Fort,
Mumbai on August 7, 2003 between 10.30 a.m. and 12.30 p.m. in
sealed cover superscribed "Tender for Government of India Floating Rate
Bonds, 2011 - Auction dated August 7, 2003" or "Tender for 25-year
Government Stock - Auction dated August 7, 2003" (as the case may be) and
deposit them in the appropriate tender box at RBI, Fort, Mumbai. The
competitive bids by the NDS members should be submitted only in electronic
format using NDS, while all the non-competitive bids should be submitted in
the prescribed physical form. All bids should be submitted by 12.30 p.m.
The spread (on the base rate) or yield on Government Stock (as the case may
be) expected by the bidder should be expressed up to two decimal places in the
bids. An investor can submit more than one bid at different 'spreads'/yield
(as the case may be), but separate application should be submitted for each
bid. The aggregate amount of bids submitted by a person in any auction should
not exceed the notified amount.
6. The results of the auctions will be displayed at RBI,
Fort, Mumbai on August 7, 2003 (Thursday). Successful bidders should deposit
with that Office the amount payable for the Floating Rate Bonds/ Government
Stock allotted to them on August 8, 2003 by 2.30 p.m. in cash or by cheque on
their account with RBI, Mumbai or by Banker's Pay Order.
7. The Floating Rate Bonds and the Government Stock will be
governed by the provisions of Public Debt Act, 1944 and the rules framed
thereunder.
8. Both the Government securities will be eligible for
ready forward facility.
9. For further details, Government of India Notifications
No 4(8) -W&M/2003 and No.4(8)-W&M/2003 (i) dated August 1, 2003 may be
seen.
