RBI/2007-2008/186
IDMD.PDRS.No.
2382/03.64.00/2007-08
November
14, 2007
All
Primary Dealers in the Government Securities Market and
scheduled
commercial banks undertaking PD business departmentally
Revised
Scheme of Underwriting Commitment and Liquidity Support
Please
refer to our circular IDMC.No.3007/03.64.00/2005-06
dated April 4, 2006 on the Scheme for Underwriting Commitment.
2.
In terms of the aforesaid Scheme, the Reserve Bank of India announces the Minimum
Underwriting Commitment (MUC) for each PD and the amount for which Additional
Competitive Underwriting (ACU) auction will be held. Each PD is required to bid
for a minimum of three percent of the notified amount in the ACU auction.
3.
The Scheme has been reviewed and it has been decided that the minimum bidding
requirement for each PD in the ACU auction would henceforth be equal to the amount
of MUC. An illustration of the revised minimum commitment for PDs in the ACU auction
is enclosed in the Annex.
4.
The basis for payment of underwriting commission and other terms and conditions
of the underwriting scheme would, however, remain unchanged.
Yours
faithfully
(K.V.
Rajan)
Chief General
Manager
Annex
Illustration
of the change in minimum bidding commitment of Primary dealers in the
Additional
Competitive Underwriting auction
Sl.
No. | Name |
Basis |
Present
Method |
Revised
Method |
| (Amount
in Rs crore) |
|
Notified
Amount | |
5000 |
5000 |
| 1 |
No. of
PDs | |
19 |
19 |
| 2 |
Minimum
Underwriting Commitment |
5000/2 |
2500 |
2500 |
| 3 |
PD's
share under MUC |
2500/19 |
131.58 |
131.58 |
| 4 |
Rounded
off to | |
132 |
132 |
| 5 |
Total
PD commitment under MUC |
132x19 |
2508 |
2508 |
| 6 |
Balance
under AUC |
Total
notified
amount minus
MUC |
2492 |
2492 |
| 7 |
Minimum
bid from each
PD under AUC |
3
per cent of
notified amount |
150 |
132 |
| 8 |
Total
commitment under ACU
for each PD |
(Sr.
No. 4+
Sr. No. 7) |
282 |
264 |
| 9 |
Total
commitment under ACU
for all PDs |
(Sr
No. 7 x
Sr. No.1) |
2850 |
2508 |
| 10 |
Total
Underwriting (5+9) | |
5358 |
5016 |