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Shot in arm for gilts auction

Mumbai, Aug. 22: With a view to encouraging wider participation and retail holding of government securities, the Reserve Bank of India (RBI) today decided to allow participation on a “non-competitive” basis in select auctions of gilts. Accordingly, non-competitive bids up to 5 per cent of the notified amount will be accepted in auctions of dated securities.

RBI said that participation on a non-competitive basis in the auctions of dated government securities will be open to investors who do not maintain current account (CA) or subsidiary general ledger (SGL) account with it. The apex bank added that regional rural banks (RRBs), urban co-operative banks (UCBs) and non-banking financial companies (NBFCs) shall be covered under this scheme in view of their statutory obligations. It pointed out that investors should make a single bid for an amount not more than Rs 1 crore (face value) per auction and submit their bid indirectly through any one bank or PD offering this scheme. However, RRBs, UCBs and NBFCs will be eligible to submit their non-competitive bids directly.

The RBI said participation on a “non-competitive” basis is open to any person including firms, companies, corporate bodies, institutions, provident funds, trusts, and any other entity as may be prescribed by it. The minimum amount for bidding will be Rs 10,000 (face value) and thereafter in its multiples, as hitherto for dated stocks.

The RBI added an investor can make only a single bid under the scheme. An undertaking to the effect that the investor is making only a single bid will have to be obtained and recorded by the bank or PD.

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