Notifications

(95 kb)
Revised Scheme of Underwriting Commitment and Liquidity Support

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


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