Government of India has announced the issue of '8.20 per cent Oil Marketing Companies Government of India Special Bonds, 2023' for Rs. 22,000 crore (nominal). The Special Bonds are being issued to three Oil Marketing Companies as compensation towards estimated under-recoveries on account of sale of sensitive petroleum products during the current financial year. The Special Bonds are being issued at par to the following Oil Marketing Companies on November 10, 2008 (Monday):

(1)   Indian Oil Corporation Ltd (IOCL)                         for Rs. 11975.51 crore

(2)    Bharat Petroleum Corporation Ltd. (BPCL)           for Rs.  4693.73 crore

(3)    Hindustan Petroleum Corporation Ltd. (HPCL)     for Rs.  5330.76 crore

            The investment in the Special Bonds by the banks and Insurance Companies will not be reckoned as an eligible investment in Government securities for their statutory requirements.  However, such investment by the insurance companies will be eligible to be reckoned as investment under "other Approved Securities" category as defined under Insurance Regulatory and Development Authority (Investment) Regulations, 2000. Further, the investment by the Provident Funds, Gratuity Funds, Superannuation Funds, etc. in the Special Bonds will be treated as an eligible investment under the administrative order of the Ministry of Finance.  

The Special Bonds will be transferable and eligible for market ready forward transactions (Repo). The eligibility of these Special Bonds for the Liquidity Adjustment Facility of the Reserve Bank of India would be at the discretion of the Bank.

Department of Economic Affairs, Ministry of Finance

New Delhi:  Kartika 19, 1930; November 10, 2008

SS/GN-294/08

Issuance of Special Bonds compensates oil firms for under recoveries; transferability and repo use allowed, RBI LAF discretionary. The Government issued 8.20% Special Bonds at par to three oil marketing companies as compensation for estimated under recoveries; the bonds are transferable and repo eligible, with RBI Liquidity Adjustment Facility inclusion at the Bank's discretion. Bank and insurance investments will not be reckoned as eligible government securities for statutory requirements, though insurance investments may qualify as 'other Approved Securities' under IRDA (Investment) Regulations, 2000, and provident, gratuity and superannuation fund investments will be treated as eligible under a Ministry of Finance administrative order.