rbi: RBI to auction state government shares worth Rs 5,900 crore on September 6

Six states, including Andhra Pradesh, Assam, Bihar, Goa, Punjab, Telangana, have offered to sell the shares by auction, for a total amount of Rs 5,900 crore, RBI said in a release on Friday.

The auction will be conducted on the RBI Core Banking Solution system (E-Kuber) on September 6.

“Both competitive and non-competitive bids for the auction must be submitted in electronic format on Reserve Bank of India Core Banking Solution (E-Kuber) on September 6, 2022 (Tuesday). Competitive bids should be submitted between 10:30 am and 11:30 am. and non-competitive bids should be submitted between 10:30 a.m. and 11:00 a.m.,” the RBI said.

Physical bids will only be sent to Public Debt Department in case the system fails, it added.

In the auction, government shares up to 10% of the amount notified of the sale will each be distributed to qualified individuals and entities. Allocations will be subject to a maximum limit of one percent of the amount notified for a single bid per share under the plan for a non-competitive bidding facility. Individual investors can also bid on a non-competitive scheme through Direct retail portal.

Under the RBI release, an investor can submit more than one competitive bid with the same/different rate of return or price. However, the total number of bids submitted by a single bidder may not exceed the amount announced for each state.

The central bank said that it will determine the maximum yield/minimum price at which tenders will be accepted. According to the release, shares will be issued with a minimum nominal amount of Rs 10,000 and multiples of Rs 10,000 thereafter.

“For new shares, interest will be paid semi-annually on March 7 and September 7 each year until maturity,” it said.

The shares will be governed by the provisions of the Government Securities Act 2006 and the Government Securities Regulation 2007.

In the press release, RBI said the investment in Stocks of State Government shall be considered by banks as a qualified investment in Government Securities for Statutory Liquidity Ratio (SLR) purposes under Section 24 of the Banking Regulation Act, 1949.

Successful bidders will be able to make payments during banking hours on September 7 in Mumbai and at other RBI regional offices.

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