rbi: RBI to auction state government stocks worth Rs 5,900 crore on September 6 – Blue Barrows

Six states, including Andhra Pradesh, Assam, Bihar, Goa, Punjab, Telangana, have offered to sell stock by way of auction, for an aggregate amount of Rs 5,900 crore, the RBI said in a release on Friday.

The auction will be conducted on the RBI Core Banking Solution (E-Kuber) system on September 6.

“Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on September 6, 2022 (Tuesday). 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,” the RBI said.

Physical bids would only submitted to the Public Debt Office in case of system failure, it added.

During the auction, the government stock up to 10 per cent of the notified amount of the sale of each stock will be allotted to eligible individuals and institutions. The allotment will be subject to a maximum limit of one per cent 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 noncompetitive scheme through the Retail Direct portal.

As per the RBI release, an investor can submit more than one competitive bid at same/different rates of yield or prices. However, the aggregate amount of bids submitted by a bidder should not exceed the notified amount for each state.

The central bank said that it will determine the maximum yield /minimum price at which bids will be accepted. As per the release, stock will be issued for a minimum nominal amount of Rs 10,000 and multiples of Rs 10,000 thereafter.

“For the new stock, interest will be paid half yearly on March 7 and September 7 of each year till maturity,” it said.

The Stocks will be governed by the provisions of the Government Securities Act, 2006 and the Government Securities Regulations, 2007.

In the press release, RBI said that the investment in State Government Stocks will be reckoned as an eligible investment in Government Securities by banks for the purpose of Statutory Liquidity Ratio (SLR) under Section 24 of the Banking Regulation Act, 1949.

Successful bidders will be able to make the payments during banking hours on September 7 at Mumbai and at other RBI regional offices.