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Auction for sale of Government of India Stocks (Securities)

Government of India have offered to sell (reissue) two dated securities, viz, "7.46 per cent Government Stock, 2017" for an aggregate amount of Rs. 4,000 crore (nominal) and "8.35 per cent Government Stock, 2022" for an aggregate amount of Rs. 3,000 crore (nominal) by price based auctions. Securities will be issued for a minimum nominal amount of Rs.10,000/-and in multiples of Rs.10,000/- thereafter. Auctions will be conducted by Reserve Bank of India (RBI), Mumbai Office, Fort, Mumbai on September 9, 2002 (Monday) by using multiple price auction method..

2. Interested persons may submit bids in the prescribed form obtainable from the Regional Director, RBI, Public Debt Office, Fort, Mumbai on September 9, 2002 between 10.30 a.m. and 2.30 p.m. in sealed cover superscribed "Tender for 7.46 per cent Government Stock, 2017 - Auction dated September 9, 2002" or "Tender for 8.35 per cent Government Stock, 2022 - Auction dated September 9, 2002" (as the case may be) and deposit them in the appropriate tender box at RBI, Fort, Mumbai.

3. The price per cent expected by the bidder should be expressed up to two decimal points. An investor can submit more than one bid at different prices, but a separate application should be submitted for each bid. The aggregate amount of bids submitted by a person should not exceed the notified amount.

4. The results of the auctions will be displayed at RBI, Fort, Mumbai on September 9, 2002. Successful bidders should deposit with that office the price amount of Stock covered by their bids on September 11, 2002 before 2.30 p.m. in cash or by cheque on their account with RBI,Mumbai or by Banker's Pay Order.

5. The Government Stocks will bear interest at the rate of 7.46 per cent per annum/ 8.35 per cent per annum. Interest will be paid half-yearly. The Stocks will be governed by the provisions of Public Debt Act, 1944 and the rules framed thereunder.

6. Both the Stocks will be eligible for ready forward facility.

7. For further details please see Government of India Notifications No 4(9) -W&M/2002 and No.4(9)-W&M/2002 (1) dated September 3, 2002.

Attention Retail Investors

Retail investors can participate in the auction on a non-competitive basis through a bank or a primary dealer. For the retail investors, Rs. 200 crore and Rs. 150 crore have been earmarked in the auctions of "7.46 per cent Government Stock, 2017" and "8.35 per cent Government Stock, 2022", respectively. For more information, detailed list and telephone numbers of primary dealers/ bank branches and application forms please visit RBI web site www.ncgsecs.rbi.org.in or FIMMDA website www.fimmda.org

Government Stock offers safety, liquidity, attractive returns for long duration. No TDS, tax saving under Section 80L of the Income Tax Act.

Q. What are G-Secs?

Ans. Government of India issues securities (Government bonds or G-Secs as popularly known) , in order to borrow money from the market. The tenure of G-Secs ranges from one year to twenty-five years. The coupon rate of G-Secs is decided in an auction. The government notifies a date on which it will auction a certain security to borrow a specified amount. The auctions are conducted by the RBI. Any person can submit bids in the auction.

Q. Why should one invest in G-Secs?

Ans. The G-Secs offer safety and security, allow the investor to lock-in investments for attractive returns over a longer duration, and they can be readily sold. Interest earned on G-Secs upto Rs.3000/- is specifically exempted from income tax(Sec. 80L of IT Act). In addition, there is no TDS.

Q. How does the scheme operate?

Ans. The new scheme enables small and medium investors to purchase G-Secs in the auction on a non-competitive basis. Small and medium investors include provident funds, trusts, regional rural banks, urban co-operative banks, non-banking financial companies, corporate bodies, Hindu Undivided Families and also individuals. The investor can participate in the G-Secs auction by giving a simple application to a bank or a primary dealer without having to quote price or rate of interest.

Q. What is the minimum and maximum bid amount?

Ans. Each investor can put in a single bid amounting to a minimum of Rs. 10,000 and a maximum of Rs. One crore.

Q. Will the bidder get a firm allotment ?

Ans. Yes, all retail investors taken together will be allotted G-Secs upto a maximum of 5% of the notified amount.For instance, if the auction of G-Secs is for Rs. 5000 crore, the amount for non-competitive bidders will be Rs.250 crore. If non-competitive bids are more than this amount, all the non-competitive bidders will get proportionate allotment.

Q. At what rate will the non-competitive bidder get the allotment?

Ans. The allotment on non-competitive basis will be done at the weighted average rate that will emerge in the auction.

Q. Where can one get more information on this?

Ans. From any primary dealer or a bank that offers this facility; or through a special URL on RBI website: www.ncgsecs.rbi.org.in

For more information, detailed list & Tel. nos. of primary dealers, bank branches and application forms please visit www.ncgsecs.rbi.org.in or contact: Federal Bank Ltd., Cochin (0484 362974); Indian Overseas Bank, Chennai (044 5347754); UTI Bank, Surat ( 0261 663074); Karnataka Bank Ltd., Mangalore (0824 440708); Bank of Rajasthan, Udaipur (0294 420702); Vijaya Bank, Bangalore (080 5584281); Canara Bank, Bangalore (080 2226170); State Bank of India, Mumbai (022 2651363); HDFC Bank, Mumbai (022 2701616); Central Bank of India, Mumbai (022 2653083); Global Trust Bank, Mumbai (022 2886229); Bank of Baroda, Mumbai (022 2339424); Bank of India, Ahmedabad (079 5354281); ICICI Bank Ltd., Ahmedabad (079 6857990); Andhra Bank, Kanpur (0824-7 210010); Union Bank of India, Pune; DFHI (022 2625969); STCI Ltd. (022 2610873); ICICI Securities & Finance co. Ltd. (022 2846066); Gilt Securities Trading Corporation Ltd. (022 2646420); PNB Gilts Ltd. (022 2691812); SBI Gilts Ltd. (022 2810108); ABN AMRO Securities (India) Pvt. Ltd. (022 2022559); J.P. Morgan Securities India Pvt. Ltd. (022 2702149); Tata TD Water House Securities Ltd. (022 2703260); Deutsche Securities (India) Pvt. Ltd. (022 2078718); DSP Merrill Lynch Ltd. (022 2804170); Kotak Mahindra Capital Co.(Unlimited) (022 2341335); IDBI Capital Market Services Ltd. (022 2371212); Corpbank Securities Ltd. (022 2670436); HSBC Primary Dealership (India) Pvt. Ltd. (022 2671313); Standard Chartered-UTI Securities India Pvt. Ltd. (022 2694679)