Ref.No. IDMC. 4905 / 08.02.30.01/2001-02

May 9, 2002

To,

All Scheduled Commercial Banks/ All RRBs/
All State Co-operative Banks/ All Scheduled
Primary(Urban)Co-operative Banks/All Financial
Institutions/ All Primary & Satellite Dealers.

Dear Sirs,

Sale of Government of India Dated Securities by Auction

Government of India have offered to sell two new dated securities of 8 year and 20 year tenure for Rs.3,000 crore (nominal) each vide notifications F. No.4(9)-W&M/2002 and F. No.4(9)-W&M/2002 (1) respectively both dated May 9, 2002. Both the auctions will be yield based and will be conducted using "Multiple Price Auction" method at Mumbai on Monday, May 13, 2002. The salient features of the auctions and the terms and conditions governing the issue of the Stocks are given in the notification, which should be read along with the General Notification F.No.4(9)-W&M/2000 issued by Government on May 6, 2002 (c.f. our letter IDMC.No.4859/08.01.01/2001-02 dated May 7, 2002). We wish to draw your attention in particular, to the following:

1. Government Stock up to 5% of the notified amount of sale in both the auctions will be allotted to eligible individuals and Institutions under the Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities (enclosed with the notifications F. No.4(9)-W&M/2002 and F. No.4(9)-W&M/2002 (1) both dated May 9, 2002).
2. The Stocks will be issued for a minimum amount of Rs.10,000/- (nominal) and in multiples of Rs.10,000/- thereafter.
3. The bids should be submitted in the prescribed form of application given in Annexure I and Annexure II before 2.30 p.m. on May 13, 2002 in sealed cover superscribed "Tender for 8-Year Government Stock - Auction dated May 13, 2002" (Annexure I) and "Tender for 20-Year Government Stock - Auction dated May 13, 2002" (Annexure II) and deposited in the appropriate tender box kept for the purpose at Reserve Bank of India, Mumbai Office, Fort, Mumbai. Members of NDS should submit their competitive bids only in electronic format. The bids on behalf of retail clients under the "Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities" should be submitted in formats Annexure I (a) and Annexure II (a). The yield percent per annum expected by the bidder should be expressed up to two decimal points.
4. An investor can submit more than one bid at different yields 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.
5. On the basis of bids received, the Reserve Bank will determine the maximum rate of yield i.e. the coupon rate, up to which tenders for purchase of Government Stocks will be accepted in the auction. All such bids offered at the maximum rate of yield, as determined by the Reserve Bank of India, will be accepted at par. Other bids tendered at lower than the maximum rate of yield determined by the Reserve Bank of India will be accepted at the rate quoted in the bid. Bids quoted at rates higher than the maximum rate of yield determined by the Reserve Bank of India will be rejected. Reserve Bank of India will have full discretion to accept or reject any or all bids either wholly or partially without assigning any reason
6. The results of the auctions will be displayed at Reserve Bank of India, Fort, Mumbai on May 13, 2002. Successful bidders will be required to deposit with the Reserve Bank of India, Mumbai Office (Public Debt Office), Fort, Mumbai, the amount payable for the Government Stock allotted to them in cash or by cheque on their account with Reserve Bank of India, Mumbai or by Banker’s pay order, along with a covering letter on May 14, 2002 before 2.30 p.m. In case of holders of Current account with RBI, the amount payable will be debited to their respective Current accounts maintained with the Reserve Bank of India.
7. 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. The interest will be payable half-yearly on November 14 and May 14.
8. The 8 year Stock will be repaid at par on May 14, 2010 and the 20 year Stock will be repaid at par on May 14, 2022.

2. Both the new stocks will qualify for the Ready-forward facility.

Yours faithfully,

Sd/
(A.S.Rao)
General Manager
Encl.: As above