Gives you the opportunity to buy G-Sec / T-Bills at primary market auctions of RBI.
Government Securities or G-Secs, State Development Loans & T-Bills are sold by RBI through periodic public auctions.
Who can deal with SBI DFHI ?
- Individuals
- Corporates
- Regional Rural Banks
- Co-operative Banks
- Provident Funds, Pension Funds, Gratuity Funds
- Trusts
- Insurance Companies
- Mutual Funds
- Banks
You can open CSGL Accounts with us (CSGL Account opening form & Agreement) for keeping your Government Securities, State Development Loans & Treasury Bills and for ease of your transactions.
Pre-requisites: Demat account or a CSGL account either with SBI DFHI or any Bank/Primary Dealer.
What are the bid amounts?
Under competitive bidding, we can help you with bids starting with Rs. 2 crores (face value) and in multiple of Rs 1 lac (face value).
Under non-competitive bidding, a minimum amount of Rs. 5 lacs (face value) and in multiple of Rs. 1 lac thereafter and maximum of Rs. 2 crores (face value) may be bid in each auction. Please read terms & conditions(link to the bottom links terms and conditions document)
How to place my bid ?
(You should be registered with us for using this facility)
Click here to view the RBI auction calendar
You may also contact SBI DFHI Corporate Office
Download Order form for participation –
Competitive and non-competitive bidding
Send completed order form via :
fax : 022-2262 5968 / 22610483.
Attn: Mr. Bhavesh/ Ms. Surya/Ms. Anuja or
you can mail it to: newbusiness@sbidfhi.com
This should reach us a day prior to the auction date. However, for individual bids of Rs.5 crore and more under competitive bidding, you may contact our dealer by telephone, latest by 11.00 a.m. on the day of auction itself at 022 2262 5944.
The results of the auction will be either e-mailed or faxed or advised telephonically to you.
When do I transfer funds to SBI DFHI ?
Funds would require to be received by us before 12 noon on the issue date (the working day after the auction) in our account.
What if SBI DFHI fails to receive the funds on time ?
SBI DFHI has to make payment on the date of issue itself. In case payment is not received in time, SBI DFHI reserves the right to sell the securities in the market and any costs / losses incurred in the process are liable to be reimbursed by the client. SBI DFHI may, at its sole discretion, refrain from exercising this right for a few days, at the request of a customer, in which event coupon interest will be payable by the client for the intervening days.
How do I price my bid under non-competitive bidding?
The RBI either reissues additional securities under an existing scrip (eg. 7.99% GS 2017) or issues new scrip which are currently not available. For reissuances of existing scrip, the auction is based on price and for new scrip it is based on yield. All auctions are multiple price auctions (competitive bidding) with scrips being allotted to the highest bidder downwards in terms of price (or the lowest yield upwards, in terms of yields) upto the predetermined notified amount. 5% of the notified amount in G-Secs is generally reserved under non-competitive bidding, where price is discovered at the auction itself.
Bids may be placed both for the competitive bidding as well as under the non-competitive bidding.
Why is price of a re-issued scrip different from face value?
The price of a scrip at any point of time depends on the coupon rate vis-à-vis G-Sec. interest rate prevalent at the point of time. For e.g. if the market participants are willing to invest in a 10 year G-Sec. today at say 7.5% p.a., then the 7.99% GS 2017 benchmark scrip will be reissued at a price which is at a premium to the face value. Any further fall in interest rates will result in an increase in price of the scrip.
How many bids can I make in any auction?
An investor can make multiple bids under the competitive bidding, with different prices / yields (as applicable) but can make only a single bid and only through one Bank or Primary Dealer under the non-competitive bidding, in each specified auction.
How are securities issued ?
RBI will credit the securities to the CSGL account of SBI DFHI on the issue date, which in turn will credit the securities to your CSGL account the next working day or to your demat account in approx. 10 working days (as this is the process time).
How will RBI allot the bids?
All auctions under the competitive bidding are multiple price or multiple yield auctions, with scrips being allotted to the highest bidder downwards in terms of price, or lowest yield upwards in terms of yields, whichever is applicable, upto the pre-determined notified amounts.
Under the non-competitive bidding, the security will be allotted at the weighted average price which emerges under the competitive bidding.
What advantage do I enjoy in Non-Competitive bidding?
Allotment is assured under the non-competitive bidding. This may be on a prorata basis if the aggregate bids exceed the auctioned amount.
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Example :
Amount reserved under non-competitive bidding – Rs. 100 crores.
Aggregate amount of bids received – Rs. 120 crores.
Allotment @ 83.33% (100/120%) to all bidders.
The price at which the security will be given by RBI under Non-Competitive bidding will be the Weighted Average Price which emerges in the auction, i.e., in the 95% competitive bidding (In new scrips it will be the Weighted Average yield that emerges). Thus, you get allotment at the mean price, which gives you a tremendous price advantage, as the mean price is always lower than the peak price bid.
You, therefore, have a chance of getting the scrips at a very reasonable price which has emerged on the basis of interest rate views taken by large financial institutions.
Example:
Auction size (say 8.24% GS 2018) = Rs.1000 crores.
Reserved for non-competitive bidding Rs 50 crores.
| Competitive bids received: |
| Amount |
Price |
Allotment |
| (notional or (face value = 100) face value) |
| 200 crores |
109 |
200 crores @ 109 |
| 400 crores |
107 |
400 crores @ 107 |
| 100 crores |
106 |
100 crores @ 106 |
| 200 crores |
105 |
200 crores @ 105 |
| 300 crores |
104 |
50 crores @ 104 pro rata |
| 100 crores |
103 |
NIL |
| 1300 crores |
|
950 crores |
Weighted average price of allotted scrips is 106.74.
Price at which the 50 crores non – competitive Bids will be allotted is : 106.74 which is below the price at which scrips aggregating Rs. 600 crores of face value were allotted.
The actual allotment may vary at times from the partial allotment rates due to rounding off, to ensure that allotted amounts are in multiples of Rs.10000/-.
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What is the advantage in the competitive bidding?
You can take a view on the interest rate and bid accordingly. This is extremely useful for Banks, Co-operative Banks and Regional Rural Banks to shore up their SLR requirements.
Risks involved in investing in G-Secs / T-Bills?
These are securities issued by the Government of India which has never defaulted on its debt payments. Interest is paid half yearly and all G-Secs are redeemed at face value on due dates. However, all investments in debt securities are subject to market risk i.e. the value at which they are traded could vary on a day to day basis, depending on market conditions.