Ref.No. IDMD / /08.02.33/2008-09

November 17, 2008

All Scheduled Commercial Banks excluding RRBs/
All State Co-operative Banks/All Scheduled Primary
(Urban) Co-operative Banks /All Financial Institutions/
All Primary Dealers

Dear Sirs,

Government of India have offered to sell (re-issue) of "7.56 per cent Government Stock 2014" for a notified amount of Rs.6,000 crore (nominal) through a price based auction using multiple price method vide Notification No.4(2)-W&M/2008 dated November 17, 2008. Government of India have also announced sale (re-issue) of "7.94 per cent Government Stock 2021" for a notified amount of Rs.3,000 crore through a price based auction using multiple price method vide Notification No.4(2)-W&M/2008(i) dated November 17, 2008. Reserve Bank of India at Mumbai will conduct the auctions on November 21, 2008. The salient features of the auctions and the terms and conditions governing the issue of the Stocks are given in the Notifications (copies enclosed), which should be read along with the General Notification F.No. 4 (13)–W&M/2008, dated October 8, 2008 issued by Government of India.

2. We wish to draw your attention, in particular, to the following:

(i) The Stocks will be issued for a minimum amount of Rs.10,000/- (nominal) and in multiples of Rs.10,000/- thereafter.

(ii) The competitive bids should be submitted in the prescribed form of application given in Annexure I/II, before 12.30 P.M. on November 21, 2008 in sealed covers superscribed "Tender for 7.56 per cent Government Stock 2014- Auction dated November 21, 2008 ' or, 'Tender for 7.94 per cent Government Stock 2021 -Auction dated November 21, 2008" (as the case may be) and deposited in the appropriate tender box kept for the purpose at Reserve Bank of India, Fort, Mumbai. The price percent expected by the bidder should be expressed up to two decimal points.

(iv) The NDS members should submit competitive as well as non-competitive bids in electronic format using Primary Market Operation (PMO) module of NDS. All bids should be submitted by 12.30 P.M.

(v) An investor can submit more than one bid at different prices but a separate application should be submitted for each bid. The aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.

(vi) On the basis of bids received, the Reserve Bank will determine the minimum price up to which tenders for purchase of Government Stock will be accepted at the auctions. Bids quoted at rates lower than the minimum price determined by the Reserve Bank of India will be rejected. Reserve Bank of India will have the full discretion to accept or reject any or all bids either wholly or partially without assigning any reason.

(viii) The Government Stocks will be issued by credit to Subsidiary General Ledger Account (SGL) of parties maintaining such account with Reserve Bank of India or in the form of Stock Certificate. Interest on the Government Stock will be paid half-yearly.

(ix) The Government Stocks will be repaid at par on November 3, 2014 and May 24, 2021, respectively.

(x) The Stocks will qualify for the ready forward facility.

(xi) The Stock will be eligible for "When Issued" trading for a period commencing from November 18-21, 2008 in accordance with the guidelines on ‘When Issued’ transactions in Central Government Securities’ issued by the Reserve Bank of India vide circular No. RBI /2006-07/178 dated November 16, 2006 as amended from time to time.

Yours faithfully,

(R.Subramanian)
Deputy General Manager