Ref.No.IDMC.4242 /08.02.29.01/2000-01

April 26, 2001

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

Dear Sirs,

Auction of Government of India Dated Securities

Government of India have offered to sell (re-issue), vide Notification no.4(7)-W&M/2001 dated April 25, 2001, the dated security "11.50% Government Stock, 2011" for a notified amount of Rs 4,000 crore (nominal) by a price based auction. Government of India have also offered to sell, vide Notification no.4(7)-W&M/2001(1) dated April 25, 2001, a new dated security of 17 years tenure for a notified amount of Rs 2,000 crore (nominal) by a yield based auction. The auctions will be conducted by Reserve Bank of India at Mumbai on April 27, 2001. The salient features of the auctions and the terms and conditions governing the issue of the Stocks are given in the notifications (copy enclosed), which should be read along with the General loan Notification F.No.4(2)-W&M/97 issued by Government on April 1, 1997 (c.f. our letter IDMC No 3254/08.08.20/96-97 dated 1^st April,1997) as amended by Government notification F. No. 4(7)-W&M/99 dated 5th April, 1999.

2. We wish to draw your attention, in particular, to the following :

1. The Stocks will be issued for a minimum amount of Rs.10,000/- (nominal) and in multiples of Rs.10,000/- thereafter.
2. The bids should be submitted in the prescribed forms of application given in Annexure(s), before 2.30 p.m. on April 27, 2001 in sealed covers superscribed "Tender for 11.50% Government Stock 2011-Auction dated April 27, 2001" or "Tender for 17-year Government Stock –Auction dated April 27, 2001"(as the case may be) and deposited in the appropriate tender box kept for the purpose at Reserve Bank of India, Fort, Mumbai. For the price-based auction, the price per cent expected by the bidder should be expressed upto two decimal points. For the yield-based auction, the yield per cent per annum expected by the bidder should be expressed upto two decimal points.
3. An investor can submit more than one bid at different prices/yields but a separate application should be submitted for each bid. The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of each loan.
4. For the price based auction : On the basis of bids received, the Reserve Bank will determine the minimum price upto which tenders for purchase of Government Stock will be accepted at the auction. Bids quoted at rates lower than the minimum price 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.
5. For the yield based auction : On the basis of bids received, the Reserve Bank will determine the maximum rate of yield i.e. the coupon rate, upto which tenders for purchase of Government Stock will be accepted at 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 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 April 27, 2001. Successful bidders will be required to deposit with the Reserve Bank of India, 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 April 30, 2001 before 2.30 p.m. In case of current account holders, 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. Interest on the Government Stock will be paid half-yearly.
8. The "11.50% Government Stock 2011" will be repaid at par on November 24, 2011 and the new 17-year Government Stock will be repaid at par on April 30, 2018.
9. Both the Government Stocks will qualify for the ready forward facility.

Please acknowledge receipt.

Yours faithfully,

Sd/-

(A.S.Rao)
General Manager