IDMC.PDRS.No. 5018/03.64.00/2000-01

17 May 2002

All Primary Dealers

Scheme for Bidding, Underwriting and
Liquidity Support to Primary Dealers-2001-02

Please refer to our letter IDMC.No. 4135/03.64.00/2000-01 dated April 19, 2001 forwarding to you the captioned scheme.

2. It has been decided to reduce the penalty period for reduction in Liquidity support, in case a PD fails to submit the required minimum bid or submits a bid lower than its commitment in any auction of Treasury Bills, from the existing 6 months to 3 months.

3. Accordingly, the clause (C) of Paragraph 1 (B) of the scheme is modified as under:

" If any Primary Dealer in any auction of Treasury Bills, fails to submit the required minimum bid or submits a bid lower than its commitment, the Reserve Bank will reduce assured liquidity support to the extent of shortfall/ failure in submission of bids for a period of three months from the date so specified by the Reserve Bank. For instance, if a bid is short by an amount of Rs. 10 crore, liquidity support will be reduced by an amount of Rs. 10 crore for three months."

Yours faithfully,

(Rekha Warriar)
Deputy General Manager