The Reserve Bank of India (RBI), in a bid to broadbase and deepen the government securities market, has allowed retail investors to participate in gilts auction through non-competitive bidding. The facility will be available through banks and primary dealers.
The minimum bid amount has been fixed at Rs 10,000 and thereafter in multiples for the same amount. The maximum amount for a single investor has been capped at Rs 1 crore, while the overall ceiling for retail investors has been capped at 5 per cent of the notified amount. The allocation will be done as per the weighted average rate of bids accepted at the auction.
The central bank said that investors who do not maintain a current account or subsidiary ledger account are eligible to access the facility.
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In effect, the participation on a non-competitive basis will be open to individuals, firms, companies, corporate bodies, institutions, provident funds and any other entities as prescribed by the apex bank.
Regional rural banks, urban co-operative banks and non-banking finance companies, which were barred from security auction, will also be able to avail of non-competitive bidding.