The Reserve Bank of India on Monday said it will conduct auction of three government dated securities worth Rs 30,000 crore. The securities will be sold through the RBI's Mumbai office on August 21, according to an official notification.
"Government of India (GOI) will have the option to retain additional subscription up to Rs 2,000 crore against each security," RBI said.
The auction will be a multiple price-based process in which successful bids will get accepted at their respective quoted price for the security. The stocks will be issued for a minimum amount of Rs 10,000 (nominal) and in multiples of Rs 10,000 thereafter.
The apex bank said that both competitive and non-competitive bids for the auction should be submitted in electronic format on the RBI Core Banking Solution (E-Kuber) system on August 21. "The non-competitive bids should be submitted between 10.30 AM and 11 AM and the competitive bids should be submitted between 10.30 AM and 11.30 AM," it said.
The result of the auction will be announced on the same day and payment by successful bidders will have to be made on August 24, 2020.
Any person resident in India including firms, companies, corporate bodies, institutions, State Governments, Provident Funds and Trusts, can invest in the government securities. Non-Resident Indians (NRIs), Foreign Institutional Investors (FIIs) registered with the Securities and Exchange Board of India (SEBI) and approved by the central bank are also eligible to invest.
The government stock up to 5 per cent of the notified amount of sale will be allotted to the eligible individuals and institutions under the scheme for non-competitive bidding facility in the auctions of government securities, it said.
The central bank resorts to sale of government securities when it feels that there is excess liquidity in the market. In case of liquidity crunch, it buys securities to maintain stability in the market. Based on a review of the current liquidity and financial conditions, the RBI conducts open market operations to ensure that all market segments remain liquid and stable, and function normally.
By Chitranjan Kumar