THE GAZETTE OF TNDIA: EXTRAORDINARY

[PARI I—SEC. 11

MINISTRY OF FINANCE

(Department of Economic Affairs)

(BUDGET DIVrSION)

NOTIFICATION

New Delhi, the 3rd December. 2001

Auction for Sale (rc-issuc) of "10.71 per cent Government Stock, 2016"

F. No. 4(7)-W&M/200l.— Government of India hereby notifies sale (reissue) of "10.71

per cent Government Stock, 2016" for an aggregate amount of Rs. 3*000 crore

(nominal). 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 No. 4(2)-W&M/97, dated 1^st April, 1997 issued by

Government of India as amended by Notification No. 4(7)-W&M/99, dated 5^th April,

1999.

Method of Issue

Government Stock will be sold through Reserve Bank of India, Mumbai

Office, Fort, Mumbai - 400 001 by a price based auction-

Place and date of auction

The auction will be conducted by Reserve Bank of India, Mumbai Office,

Fort, Mumbai-400 001 on December 5, 2001. The application form duly filled in

with the bids should be submitted to the aforesaid office on December 5, 2001, before

the close of the banking hours.

Tenure

The Stock will be of fifteen years tenure. The tenure of the Government Stock

will commence from April 19, 2001. The stock will be repaid at par on April 19,

2016.

Date of issue and payment for the stock

The result of the auction shall be displayed by the Reserve Bank of India at its

Fort, Mumbai office on December 5, 2001. The payment by *hc successful bidders

will be on December 6, 2001 i.e. the date of issue. The payment for the Stock will

include accrued interest on the nominal value of the Stock applied for from the date of

last coupon payment, i.e., from October 19, 2001.

__5

NOTIFICATION

New Delhi, the 3rd December, 2001

Auction for Sale of Government of India Floating Rate Bonds 2009

No. 4(7)-W&M/200i (i).—-Government of India hereby notifies sale of Floating Rate

Bonds (hereinafter called 'the Bonds') of 8-Year 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 No. 4(2)-W&M/97 dated 1^st April, 1997 [except Para

5.3.(iii)] issued by Government of India as amended by Notification No. 4(7)-

W&M/99 dated 5^th April, 1999.

Methofl of Issue

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 upto 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 Bonds.

THE GAZETTE OF INDIA; EXTRAORDINARY

[PART I—SEC. 1]

(iv)

The bid for the spread on the variable base rate, expressed upto 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 the

Reserve Bank of India will be accepted at the maximum spread so determined. Bids

quoted at spreads higher than the spread determined by the 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.

Place and Date of Auction

The auction will be conducted by the Reserve Bank of India, (Public Debt

Office), Mumbai Office, Fort, Mumbai - 400 001 on December 5, 2001. The

application form duly filled in with the bids should be submitted to the aforesaid

office on December 5, 2001 before the close of banking hours.

Tenure

The Floating Rate Bonds will be of eight-year tenure. The tenure of the Bonds

will commence from December 6, 2001. The Bonds will be repaid at par on

December 6, 2009.

Issue Priqe

The Floating Rate Bonds, 2009 will be issued at par, i.e., at Rs. 100.00 per

cent.

Date of Issue and payment for the Bonds

The result of the auction shall be displayed by the Reserve Bank of India at its

Public Debt Office, Fort, Mumbai on December 5, 2001. The payment by successful

bidders shall be made on December 6, 2001 i.e. the date of issue.

Interest

7 (i). Interest will accrue from December 6, 2001 (date of issue) and will be payable

every half-year on June 6 and December 6.

(ii)

The rate of interest per annum payable on the Bonds shall be set upto 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 December 6,

2001 to June 5, 2002, shall be the average rate rounded off upto 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 upto two decimal places) of the implicit yields at cut-off

_1_

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 report'">g 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.

(v)

The base rate for payment of interest on June 6, 2002 will be 6.99 per cent.

Accordingly, the rate of interest applicable for half-year ending June 5, 2002 shall be

6.99 per cent plus the spread determined in the auction. The rate of interest for

subsequent half-yearly interest payment shall be announced by the Reserve Bank of

India before the commencement of the relative half-yearly coupon period.

By Order of the President of India

D, SWARUP, Addl. Secy. (Budget)

Annexure

Illustration: Base rate and rate of interest payable on Floating Rate Bonds 2009

Calculation of Base Rate applicable for half year ending June 5, 2002.

Serial

No.

Date of

Auction

19-Sep-2001

03-Oct-2001

17-Oct-2001

31-OCI-2001

13-Nov-2001

28-Nov-2001

Base Rate =

Cut-off

Price

93.18

93.36

93.31

93.58

93.62

93.74

Total =

41.9543 =

Implicit yield®

at cut-off price

7.3192

7.1123

7.1696

6.8604

6.8148

6.6780

41.9543

6.9924

Rounded off to two decimal places

6.99

If the spread decided in the auction is

0.35

(example only)

Interest rate applicable for half year

7.34 (Percent per annum)

December 6, 2001 to June 5, 2002

@ annualised for 364 day year.

Printed by tha Manager, Govt, of India Press. Ring Road. Mayapurl, New Delhl-110064

and Published by the Controller ot Publications, Delhl-110054 — 2001