GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Economic Affairs)
(Budget Division)

New Delhi, the 28^th June, 2002

No.4(7) – W&M/2001(1): Government of India hereby notifies sale of Floating Rate Bonds (hereinafter called 'the Bonds') of 15 years tenure for an aggregate amount of Rs 3,000 crore. The sale will be subject to the terms and conditions spelt out in this notification (called `Specific Notification’) as also the terms and conditions specified in the General Notification F.No.4(9)-W&M/2000 dated 6^th May, 2002 issued by Government of India.

2 (i) The Bonds will be sold through the Reserve Bank of India, Public Debt Office, Fort, Mumbai - 400 001 through auction.

(ii) The rate of interest per annum on the Bonds payable every half year shall be set up to two decimal places at a spread on the variable base rate (see sub paragraph 7(iii) below).

(iii) The spread on the variable base rate will be decided in the auction and will remain fixed throughout the tenure of the Bond.

(iv) The bid for spread on the variable base rate, expressed unto and rounded off to two decimal places should be clearly stated in the application.

(v) The auction will be conducted by using the Uniform Price Auction method where bids offered up to and including the maximum spread as determined by Reserve Bank of India will be accepted at the maximum spread so determined. Bids quoted at spreads higher than the spread determined by Reserve Bank of India will be rejected.

(vi) Applicants may submit more than one bid at different spreads, as the case may be through separate applications for each bid. The aggregate amount of bids submitted by a person should not exceed the aggregate amount of the Bonds offered for sale.

(vii) The Reserve Bank of India will have full discretion to accept or reject any or all bids either wholly or partially, without assigning any reason.

3. The auction will be conducted by the Reserve Bank of India, (Public Debt Office), Mumbai Office, Fort, and Mumbai on July 1, 2002. The application form duly filled in with the bids should be submitted to the aforesaid Office on July 1, 2002 before the close of banking hours.

4. The Floating Rate Bonds will be of fifteen year tenure. The tenure of the Bonds will commence from July 2, 2002. The Bonds will be repaid at par on July 2, 2017.

5. The Floating Rate Bonds, 2017 will be issued at par, i.e., at Rs.100.00 per cent.

6. The result of the auction shall be displayed by the Reserve Bank of India at its Public Debt Office, Fort, Mumbai on July 1, 2002. The payment by successful bidders shall be made on July 2, 2002, i.e., the date of issue.

7. (i) Interest will accrue from July 2,2002 ( date of issue) and will be payable every hallf-year on January 2 and July 2.

(ii) The rate of interest per annum payable on the Bonds shall be set up to two decimal places every half-year at a "spread" to be decided in the auction, on the variable base rate (see sub paragraph (iii) below).

(iii) The base rate for payment of interest for the half year period of July 2, 2002 to January 1, 2003 shall be the average rate rounded off up to two decimal places, of the implicit yields at cut-off prices of the last six auctions of Government of India 364 day Treasury Bills, held before the date of issue (Please see Annexure for illustration). The base rate for payment of interest on subsequent half year periods shall be the average rate (rounded off up to two decimal places) of the implicit yields at cut-off prices of the last six auctions of Government of India 364 day Treasury Bills held up to the commencement of the respective half yearly coupon period. The implicit yields will be computed by reckoning 364 days in a year.

(iv) In the event of Government of India 364-day Treasury Bill auctions being discontinued during the currency of the Floating Rate Bonds, the base rate will be the average of Yield to Maturity (YTM) rates prevailing for one year Government of India Security, as on the last six reporting Fridays prior to the commencement of the half yearly coupon period. In case particular Friday/s is/are holiday/s, the yield to maturity rates as on the previous working day shall be taken.