IIBs for Rs 1,000 cr to be sold on June 4

IIBs for Rs 1,000 cr to be sold on June 4

The Centre's move to encourage Indian investors to shun gold and look at financial assets will formally take off on June 4 with the auction of its Rs 1,000 crore Inflation-Indexed Bond (IIB) programme

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The “New Inflation Indexed Government Stock-2023” will be sold through yield based auction using uniform price method at the Reserve Bank of India's Mumbai office and the results of the auction will be announced on the same day. Successful bidders will have to pay on June 5, a Union Finance Ministry statement said.

The statement added that up to 20 per cent of the notified amount (Rs 1,000 crore) will be alloted to eligible individuals and institutions as per the scheme for non-competitive bidding facility in the auction of government securities.

The competitive and non-competitive bids for the auction will have to be submitted in electronic format on the RBI's Core Banking Solution (E-Kuber) system on June 4. While the time slot for competitive bids is from 10.30 am to 12 noon, the non-competitive bids will have to be submitted between 10.30 am and 11.30 am, the statement said. The IIBs will be issued within the planned government market borrowing programme for the first half of 2013-14. 

The penchant for gold among Indians, which has contributed to the current account deficit rising rapidly, is however, likely to stay and actually grow, according to the World Gold Council. It estimated that Indian gold demand, which represents about 28 per cent of global consumer demand, is set to rise up to 150 per cent y-o-y in the quarter ended June 2013, translating roughly to 400 tonnes of imports. 

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