Friday, June 29, 2018

AUCTION FOR SALE (RE-ISSUE) OF GOVERNMENT STOCK (GS)

WHAT WAS THE NOTIFICATION? 
 Government of India(GoI) has notified sale(re-issue) of the Government Stocks 
 Interest: Interest will accrue on the nominal value of the Stock from the date of original / last coupon payment and will be paid half yearly. The Stock will be repaid at par on date of maturity.

WHAT ARE GOVERNMENT STOCKS/BONDS/SECURITIES? 
 One of the bonds sold by a government to finance its budget deficit (the difference between what it gets in taxes and what it spends). Government bonds are usually considered to be a very safe form of investment.
 A government security is a bond issued by a government authority with a promise of repayment upon maturity. Government securities such as savings bonds, treasury bills and notes also promise periodic coupon or interest payments. These securities are considered low-risk, since they are backed by the taxing power of the government.  The terms on which a government can sell bonds depend on how creditworthy the market considers it to be. International credit rating agencies will provide ratings for the bonds, but market participants will make up their own minds about this.

AUCTION OF GOVERNMENT OF INDIA DATED SECURITIES

WHAT WAS THE NOTIFICATION? 
 Government of India has offered to sell (re-issue) dated securities for notified amount of Rs. 15,000 crore
 The Stocks will be issued for a minimum amount of Rs. 10,000/- (nominal) and in multiples of Rs. 10,000/- thereafter.


CONDITIONS OF THE AUCTION 
 Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. 
 Bids in physical form will not be accepted except in extraordinary circumstances 
 An investor can submit more than one competitive bid at different prices in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction. 
 The Government Stocks will be issued by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such account with Reserve Bank of India or in the form of Stock Certificate. Interest on the Government Stock will be paid half-yearly.

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