Notifications

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Sale of Government of India Treasury Bills by Auction

Government of India
Ministry of Finance
(Department of Economic Affairs)

Notification

New Delhi, the May 26, 2016

Subject: Sale of Government of India Treasury Bills by Auction

F.No.4(8)-W&M/2015: In supersession of Government notifications No. F.4(14)-W&M/86 dated 18th November, 1986; No. F.2(17)-W&M/92 dated Ist January, 1993; No. F.2(17)-W&M/92 dated 4th July, 1994; No. F.2(1)-W&M/97 dated 20th May, 1997; No. F.2(1)-W&M/97(i) dated 20th May, 1997; No F. 2(12)-W&M/97 dated 31st March 1998 and F.No.2(12)-W&M/97 dated 19th April 2016, the Government of India hereby notifies the sale of “Government of India Treasury Bills” (hereinafter the “Bills”) on auction basis.

Main Features:

2. (i) The Bills of varying maturities with a maximum tenor of upto 364 days will be sold by the Reserve Bank of India (hereinafter called “the Bank”) on auction basis. The date and place of auction, and the exact tenor of bills will be announced by the Bank from time to time.

(ii) The Bank will notify the nominal amounts of bills to be sold to competitive bidders from time to time.

(iii) The Bank may make allocations at the auctions by means of either ‘uniform price auction’ or ‘multiple price auction’. The method of auction will be announced by the Bank from time to time.

(iv) The Bills would be issued at a discounted price.

(v) In respect of competitive bids, the rate of discount and the corresponding issue price would be determined at each auction. In the case of uniform price auction, competitive bids will be accepted at the minimum discounted price called cut-off price determined at the auction, irrespective of bid prices tendered. In the case of multiple price auction, competitive bids will be accepted upto the minimum discounted price called ‘cut off’ price determined at the auction, at bid prices tendered at the auction. Competitive bids at offer prices lower than the ‘cut off’ price will be rejected in the case of both uniform and multiple price auctions (Illustrations in Annexure-I).

(vi) Allocation for ‘non-competitive’ bids will be at the discretion of the Bank. These non-competitive bids will be outside the notified amount. Such allocation for ‘non-competitive’ bids will be at the weighted average price arrived at on the basis of the competitive bids accepted at the auction.

(vii) The Bank will have the full discretion to accept or reject any or all the bids either wholly or partially, as deemed fit by it, without assigning any reason.

(viii) The Bank may, if it considers appropriate to do so participate in the auction as a ‘non-competitor’ and buy bills for part of or whole of the amount notified at the cut-off price decided in the auction.

Eligibility for Investment:

3. The investment in the Treasury Bills, through competitive route, may be made by any person resident in India, including firms, companies, corporate bodies, institutions and Trusts. Non-Resident Indians and Foreign Investors are eligible to invest subject to the approval of the Government and provisions of Foreign Exchange Management Act, 1999 and the Regulations framed there under, in addition to the other provisions of laws applicable to Government Securities.

4. Eligible entities could participate on ‘non-competitive’ basis in auctions for specified Bills as decided by the Bank from time to time. The State Governments, eligible provident funds in India, the Nepal Rashtra Bank and any Person or Institution, specified by the Bank, with the approval of Government, in this regard, can participate on non-competitive basis. Individuals can also participate on non-competitive basis as retail investors. For retail investors, the allocation will be restricted to a maximum of 5 percentage 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.

Explanation: The allocation for individuals shall be within notified amount and for other eligible entities outside notified amount.

Note: Eligible 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.

Tenders for purchase of Government of India Auction Treasury Bills:

5. (i) Details of the procedure relating to auction for sale of the Bills will be announced by the Bank from time to time.

(ii) Intending investors would be required to submit their tender at the designated offices of the Bank, as notified by it, on the day of the auction, upto the close of banking hours for the issue of bills in the prescribed Application Form (Annexure II for investors other than State Governments and Nepal Rastra Bank and Annexure III for State Governments and Nepal Rastra Bank).

(iii) A competitive bidder would be eligible to submit multiple tenders at different prices in separate forms. Applications which do not contain necessary details such as the nominal value of the Bill and the price per ₹ 100/- at which the Bills are proposed to be purchased, are liable to be rejected without reference to the applicant.

(iv) The successful bidder/s would be required to deposit the requisite amount to the Bank by cash/ cheque/ DD/ e-banking/ Banker’s Pay Order or by authorization to debit their current Account at Reserve Bank of India.

Note: The bidders are required to submit Cash / Cheque / DD / Banker’s Pay Order, etc. in full while submitting his application/ tender.

Minimum Subscription:

6. Bills will be issued for a minimum amount of ₹ 10,000/- (Rupees Ten Thousand only) and in multiples of ₹ 10,000/- on competitive basis, as well as on non-competitive basis.

Form:

7. The Bills will be issued in the form of Promissory Note/ Credit to Subsidiary General Ledger (S.G.L.) Account.

Transferability:

8. The bills will be transferable in terms of the Government Securities Act, 2006 and the Government Securities Regulations, 2007.

Repayment:

9. The Bills will be repaid at par on the expiration of their tenor at the office of the Bank at which they are registered.

Laws applicable in regard to the Bills:

10. (i) The rights of all persons subscribing to or holding the Bills shall be determined in accordance with the provisions of the Government Securities Act, 2006 and the Government Securities Regulations 2007, read with the terms of this Notification, and such other Notifications as may be issued from time to time by the Bank, in consultation with Government of India in this regard.

(ii) The tax laws in India will apply for the purpose of assessing and determining the liability of the investor or holder of the Bills.

(iii) Any dispute in relation to the Bills shall be decided by the Courts in India.

(Prashant Goyal)
Joint Secretary to the Government of India


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