Ref.No. IDMD/1893/08.02.032/2012-13

December 24, 2012

All Scheduled Commercial Banks

All State Co-operative Banks/All Scheduled Primary

(Urban) Co-operative Banks /All Financial Institutions/

All Primary Dealers.

Dear Sir/Madam,

Govenment of India have offered to sell (new/re-issue)-

(a) “8.12 percent Government Stock 2020” for a notified amount of Rs.3,000 crore (nominal) through a price based auction using uniform price method vide Notification No.4(5)-W&M/2012 dated December 24, 2012;

(b) “8.20 percent Government Stock 2025” for a notified amount of Rs.6,000 crore (nominal) through a price based auction using uniform price method vide Notification No.4(5)-W&M/2012(i) dated December 24, 2012; and

(c) A new 30-Year Government Stock ” for a notified amount of Rs. 3,000 crore (nominal) through a yield based auction using uniform price method vide Notification No.4(5)-W&M/2012(ii) dated December 24, 2012. The Reserve Bank of India at Mumbai will conduct the auctions on December 28, 2012. 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:

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

In all the auctions, Government Stock up to 5% of the notified amount of sale will be allotted to the eligible individuals and institutions under the Scheme for Non-competitive Bidding Facility in the Auctions of Government Securities (enclosed with the notifications F.No.4(5)-W&M/2012, F.No.4(5)-W&M/2012(i) and F.No.4(5)-W&M/2012(ii) all dated December 24, 2012). Each bank or PD on the basis of firm orders received from their constituents will submit a single consolidated non-competitive bid on behalf of all its constituents in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. Allotment under the non-competitive segment to the bank or PD will be at the weighted average rate of yield/price that will emerge in the auction on the basis of the competitive bidding.

Both competitive and non-competitive bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on December 28, 2012. Bids in physical form will not be accepted except in extraordinary circumstances. The non-competitive bids should be submitted between 10.30 a.m. and 11.30 a.m. and the competitive bids should be submitted between 10.30 a.m. and 12.00 noon.

An investor can submit more than one competitive bid at different prices in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system. However, the aggregate amount of bids submitted by a person in an auction should not exceed the notified amount of auction.

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.

The result of the auctions will be announced on December 28, 2012 and payment by successful bidders will be on December 31, 2012 (Monday).

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.

The Government Stocks will be repaid at par on December 10, 2020, September 24, 2025 and December 31, 2042 respectively.

The Stocks will qualify for the ready forward facility.

The Stocks will be eligible for “When Issued” trading during the period December 26, 2012– December 28, 2012 in accordance with guidelines on ‘When Issued’ transactions in Central Government Securities’ issued by Reserve Bank of India vide circular No.RBI /2006-07/178 dated November 16, 2006 as amended from time to time.

Yours faithfully

(Rajendra Kumar)

Deputy General Manager

Encls: As above

Government securities auction rules: electronic E-Kuber bidding, non-competitive quota at weighted average allotment, and ready forward eligibility. Announcement of auctions for three Central Government dated securities to be conducted by the Reserve Bank of India using uniform price methods; bids must be submitted electronically via E-Kuber within prescribed windows, with non-competitive allotment capped at five percent allotted at the weighted average auction rate. Multiple competitive bids are permitted subject to an aggregate cap equal to the notified amount, and the RBI may accept or reject bids at its discretion. Successful bidders will receive credit to SGL accounts or stock certificates; interest paid half-yearly and issues qualify for ready forward and when-issued trading.