All Scheduled Commercial Banks
All State Co-operative Banks / All Scheduled Primary
(Urban) Co-operative Banks / All Financial Institutions /
All Primary Dealers/All stock exchanges
Dear Madam/ Sir,
of Government Securities: Non-Competitive Bidding Facility to retail
Please refer to the circular IDMC./08.01.02/2001-02
dated December 7, 2001 as well as the press release dated July 28, 2016 whereby
the facility of non-competitive bidding in Government of India dated
securities and T-Bills was allowed to retail investors.
2. As part of the overall
strategy of diversifying the investor base for government securities, the
Government of India and RBI have been taking various measures to encourage
participation of retail investors in G-Sec market including introduction of
non-competitive bidding in primary auctions. In continuation of this
endeavour, the Union Budget 2016-17 had announced, inter-alia, that RBI
will facilitate retail participation in the primary markets through stock
exchanges. In line with this announcement and in consultation with SEBI, it
has been decided that in addition to scheduled banks and primary dealers;
stock exchanges will be permitted to act as aggregators/facilitators.
stock exchanges will submit a single consolidated non-competitive bid in
the auction process and will put in place necessary processes to transfer
the securities so allotted in the primary auction to their members/clients.
desirous of acting as aggregators/facilitators, may approach CGM, IDMD,
RBI, with a copy of the No Objection Certificate (NOC) from SEBI, for necessary
3. The updated Scheme for
Non-Competitive Bidding Facility in the auctions of Government Securities
and Treasury Bills is given in Annex.
Chief General Manager
for Non-Competitive Bidding Facility in the auction of
Government of India Dated Securities and Treasury Bills
I. Scope: With
a view to encouraging wider participation and retail holding of Government
securities, retail investors are allowed participation on “non-competitive”
basis in select auctions of dated Government of India (GoI) securities and
II. Definitions: For
the purpose of this scheme, the terms shall bear the meaning assigned to
them as under:
investor is any person, including individuals, firms, companies, corporate
bodies, institutions, provident funds, trusts, and any other entity as may
be prescribed by RBI.
means a Scheduled Bank or Primary Dealer or Specified Stock Exchange
permitted to aggregate the bids received from the investors and submit a
single bid in the non-competitive segment of the primary auction.
stock exchange’ means SEBI recognised Stock Exchange, which have received
No Objection Certificate (NOC) from SEBI to act as aggregator/facilitator
in the primary auction segment.
Provident Funds’ are those non-government provident funds governed by the
Provident Funds Act 1925 and Employees’ Provident Fund and Misc. Provisions
Act, 1952 whose investment pattern is decided by the Government of India.
(A) Participation on a
non-competitive basis in the auctions will be open to a retail investor
not maintain current account (CA) or Subsidiary General Ledger (SGL)
account with the Reserve Bank of India; and
the bid indirectly through an Aggregator/Facilitator permitted under the
a. Regional Rural Banks
(RRBs) and Cooperative Banks:
Rural Banks (RRBs) and Cooperative Banks shall be covered under this Scheme
only in the auctions of dated securities in view of their statutory
these banks maintain SGL account and current account with the Reserve Bank
of India, they shall be eligible to submit their non-competitive bids
b. State Governments,
eligible provident funds and Others:
Governments, eligible provident funds in India, the Nepal Rashtra Bank, Royal
Monetary Authority of Bhutan and any Person or Institution, specified by
the Bank, with the approval of Government, shall be covered under this
scheme only in the auctions of Treasury Bills.
bids will be outside the notified amount.
will not be any restriction on the maximum amount of bid for these
IV. Quantum: Allocation
of non-competitive bids from retail investors will be restricted to a
maximum of five percent of the aggregate nominal amount of the issue within
the notified amount as specified by the Government of India, or any other
percentage determined by Reserve Bank of India.
V. Amount of Bid:
1. The minimum amount for
bidding will be Rs.10,000 (face value) and thereafter in multiples in
Rs.10,000 as hitherto.
2. In the auctions of GoI dated
securities, the retail investors can make a single bid for an amount not
more than Rupees Two crore (face value) per security per auction.
VI. Other Operational
1. The retail investor desirous
of participating in the auction under the Scheme would be required to
maintain a depository account with any of the depositories or a gilt
account under the constituent subsidiary general ledger (CSGL) account of
2. Under the Scheme, an investor
can make only a single bid in an auction. An undertaking to the effect that
the investor is making only a single bid will have to obtained and kept on
record by the Aggregator/Facilitator.
Submission of Bids:
3. Each Aggregator/Facilitator
on the basis of firm orders received from their constituents will submit a
single consolidated non-competitive bid on behalf of all its constituents
in electronic format on the Reserve Bank of India Core Banking Solution
(E-Kuber) system. Except in extraordinary circumstances such as general
failure of the Reserve Bank of India Core Banking Solution (E-Kuber) system,
non-competitive bid in physical form will not be accepted.
Allotment of Bids:
4. Allotment under the
non-competitive segment to the Aggregator/Facilitator 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
Aggregator/Facilitator against payment on the date of issue irrespective of
whether they have received payment from their clients.
5. 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 Aggregator/Facilitator to appropriately allocate
securities to their clients in a transparent manner.
6. In case the aggregate amount
of bids is less than the reserved amount, the shortfall will be taken to
Issue of Security:
7. Security would be issued only
in SGL form by RBI. The Aggregator/Facilitator has to clearly indicate at
the time of tendering the non-competitive bids the amounts (face value) to
be credited to their main SGL or CSGL account.
8. Delivery in physical form
from the Main SGL account is permissible at the instance of the investor
9. It will be the responsibility
of the Aggregator/Facilitator to pass on the securities to their clients.
Except in extraordinary circumstances, the transfer of securities to the
clients should be completed within five working days from the date of
Commission/Brokerage charged to
10. The Aggregator/Facilitator
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.
11. In case, the securities are
transferred subsequent to the issue date of the security, the consideration
amount payable by the client to the Aggregator/Facilitator will include
accrued interest from the date of issue.
12. 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 Aggregator/Facilitator as per agreement with the client.
13. It may be noted that no
other costs, such as funding costs, should be built into the price or
recovered from the client.
VIII. Reporting Requirements:
Aggregators/Facilitators 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.
IX. The aforesaid guidelines are
subject to review by the Bank and accordingly, if and when considered
necessary, the Scheme will be modified.