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Buyback of WPI-Linked Inflation Indexed Bond



   Buyback of WPI-Linked Inflation Indexed Bond 



The Government of India has announced the repurchase of “1.44 per cent Inflation Indexed Government Stock-2023” through reverse auction for an aggregate amount of Rs.3298.72 crore (face value). 

The repurchase by the Government of India will be undertaken to redeem the Government Stocks prematurely by utilizing surplus cash balances. The above repurchase of the Government Stocks is purely ad hoc in nature. 

Auction for securities will be on price based auction format. The auctions will be conducted using multiple price method. Bids for the auction should be submitted in electronic format on the Reserve Bank of India Core Banking Solution (E-Kuber) system on March 28, 2016 (Monday) between 10.30 a.m. and 12.00 noon. The result of the auctions will be announced on the same day. 

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Repayment of 7.59% Government Stock 2016 and 10.71% Government Stock 2016 on April 12, 2016 and April 19, 2016 respectively 


           
                                      The outstanding balance of 7.59% Government Stock 2016 and 10.71% Government Stock 2016 are repayable at par on April 12, 2016 and April 19, 2016 respectively.  No interest will accrue there on from the said dates. In the event of a holiday being declared on April 12, 2016 and April 19, 2016 by any State Government under the Negotiable Instruments Act, 1881, the Loan/s will be repaid by the paying offices in that State on the previous working day.

                      As per sub-regulations 24 (2) and 24(3) of Government Securities Regulations, 2007 payment of maturity proceeds to the registered holder of Government Security held in the form of Subsidiary General Ledger or Constituent Subsidiary General Ledger account or Stock Certificate shall be made by a pay order incorporating the relevant particulars of his bank account or by credit to the account of the holder in any bank having facility of receipt of funds through electronic means. For the purpose of making payment in respect of the securities, the original subscriber or the subsequent holders of such Government Securities, shall submit the relevant particulars of their bank account well in advance.

 However, in the absence of relevant particulars of bank account / mandate for receipt of funds through electronic means, to facilitate repayment of the Loan on the due date, holders may tender the securities, duly discharged, at the Public Debt Offices, Treasuries / Sub-Treasuries and branches of State Bank of India and its Associate Banks (at which they are enfaced / registered for payment of interest) 20 days in advance of the due date for repayment.

             Full details of the procedure for receiving the discharge value may be obtained from any of the aforesaid paying offices.

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Finance Minister Shri Arun Jaitley: Low premium New Crop Insurance Insurance Scheme would reduce distress in the Farm Sector; Launches the NABARD Agri-Credit Monitoring portal, which will help financial institutions to monitor the status of agricultural loans given to farmer; Unveils the Roadmap of E-Shakti Expansion Programme of digitization of Self-Help Groups (SHGs). 

The Union Finance Minister Shri Aurn Jaitley launched the Pradhan Mantri Fasal Bima Yojana and the Unified Package Insurance Scheme in Mumbai today. Following-up his focus on the agriculture sector in the General Budget 2016-17 presented by him in Parliament on 29th February, 2016, Shri Jaitley said “agriculture will have to grow faster for the country to get rid of poverty and push the overall GDP expansion”. He said that agriculture was absolutely critical to the economy. 

The Finance Minister Shri Jaitley said that the revamped insurance scheme being launched by the Government have the potential to reduce distress in the farm sector. He said that they would be rolled-out in a ‘mission mode’ from April1, 2016 to cover Kharif crops. The Finance Minister Shri Jaitley said though the country had crop insurance schemes in the past, those were mainly linked to the crop loans and therefore, met with a modest level of success. 

“This is a crop insurance scheme with a difference, and the difference is absolutely critical to the Indian farmer” Shri Jaitley said. He added that since the new scheme was dependent on large volume, it would cover much larger risks at a very low premium. The farmers’ premium would be 2% for Kharif foodgrains and oilseeds crops and 1.5% for rabi crops. In the event of a crop failure, a farmer will be paid more. The Finance Minister said the Government aims to cover 50 percent of the farmers, mostly those depending upon rain-fed agriculture. 

The Finance Minister Shri Jaitley said with two successive deficit monsoons behind us, a poor rainfall this year would put the systems to test. He asserted that in that event, the successful implementation of the New Crop Insurance Scheme could become a game changer. He said the entire strength of the Indian banking, insurance and financial system would be mobilized to ensure its success. 

The Finance Minister said “the scheme has the potential to reduce distress in the farm sector and end the scar of farmer suicides affecting parts of our country.” He also said it was a significant step towards making India an ‘insured and pensioned society”. 

The New Crop Insurance Scheme also provides for a change in criteria to determine crop losses by providing local level assessment for calamities like hailstorms etc. Simple technology through phones and remote sensors would be used for quick estimation and early settlement of claims. 

Earlier, the Finance Minister Shri Jaitley launched the NABARD Agri-Credit Monitoring portal, which will help financial institutions to monitor the status of agricultural loans given to farmers. He also unveiled Roadmap of E-Shakti Expansion Programme of digitization of Self-Help Groups (SHGs). 

Ms. Anjuly Chibb Duggal, Secretary, Department of Financial Services (DFS) said the New Crop Insurance Scheme had been drafted with intense consultations with concerned stakeholders. She further urged that the schemes should percolate to the ground level by bringing large mass of farmers in the insurance net. She also said that the government may impose penalty if there were delays in settling crop insurance schemes. 

Dr. Harsh Kumar Bhanwala, Chairman, NABARD expressed his bank’s solidarity with all stakeholders in covering 50% of the farming community in India.

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Quarterly Report on Public Debt Management for the Third (Q3) Quarter of FY 2015-16 (October-December 2015) released; Government issued Dated Securities worth Rs. 1,50,000 crore in ten tranches taking the Gross Borrowings from April-December of FY16 to Rs. 5,01,000 crore or 83.5 per cent of BE FY16, vis-à-vis 83.9 percent of BE FY15. 

Since April-June (Q1) 2010-11, Budget Division, Department of Economic Affairs, Ministry of Finance, is bringing-out a Quarterly Report on Debt Management on regular basis. The current report pertains to the quarter October-December 2015 (Q3 FY 16).

During Q3 of FY16, the Government issued dated securities worth Rs. 1,50,000 crore in ten tranches taking the gross borrowings from Apr-Dec of FY16 to Rs. 5,01,000 crore or 83.5 per cent of BE FY16, vis-à-vis 83.9 percent of BE FY15. Net market borrowings during Apr-Dec of FY16 at 78.1 per cent of BE. To elongate maturity and taking into account the strong demand expressed by long term investors for longer government bonds, security with maturity of 40 years was first issued in October 2016. First tranche of Sovereign Gold Bond Scheme was also launched during the quarter.  Auctions during quarter were held broadly in accordance with the pre-announced calendar. During the Q3 FY16 the weighted average maturity of new issuance was 16.72 yrs as compared to 14.75 yrs in Q3 of last year.

Liquidity conditions in the economy remained tight during later part of the quarter. The cash position of the Government during Q3 of FY 15-16 was comfortable and remained in surplus mode during the quarter.

The Public Debt (excluding liabilities under the ‘Public Account’) of the Central Government provisionally increased by 3.0 per cent in Q3 of FY 16 on Q-o-Q basis. Internal debt constituted 92.2 per cent of Public Debt, as compared with 92.0 per cent in the previous quarter, while marketable securities accounted for 85.7 per cent of public debt.

19.4 per cent of outstanding stock has a residual maturity of up to 5 years, which implies that over the next five years, on an average, 3.9 per cent of outstanding stock needs to be rolled over every year. Thus, the rollover risk in the debt portfolio continues to be low. The implementation of budgeted buy back/ switches in coming quarter is expected to reduce roll over risk further.

G-Sec market opened the quarter on positive note on the back of RBI’s monetary policy review on September 29, 2015, with growth centric dovish commentary and accommodative forward guidance reducing policy repo rate by 50 bps. However, market lost most of its gains since October-end due to hawkish US FOMC Statements, release of 7th Pay Commission Panel report giving impression of strain on the fiscal position, etc. Ten year benchmark yield, after trading between 7.52 % and 7.85 % during the quarter, closed at 7.69% on December 31, 2015 as against 7.61% on September 30, 2015.

During Q3 FY16, trading volumes, on an outright basis, was lower by 9.09 per cent over the previous quarter, with G-securities mainly contributing to the decrease in trading activity during the quarter.  The Annualised outright turnover ratio for Central Government dated securities during Q3 of FY16 was at 3.6 as compared with 4.2 in previous quarter.

Click here for The Quarterly Report on Debt Management for the quarter October-December 2015 (Q3 FY 16).

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Atal Pension Yojana (APY) amended to give an option to the spouse to continue to contribute for balance period on premature death of the subscriber; After the death of both the subscriber and the spouse, the nominee of the subscriber shall be entitled to receive the pension wealth, as accumulated till age of 60 years of the subscriber. 

The feedback received from various quarters has indicated that the present provision under Atal Pension Yojana (APY) of handing-over lump sum amount to spouse on premature death of the subscriber is not preferred by many subscribers. It has also highlighted the fact that there is growing demand to give an option to the spouse to continue contribution after the death of subscriber to enable him / her to draw pension when the deceased subscriber would have turned 60 years of age. Therefore, after considering the feedback, the Government has decided to give an option to the spouse of the subscriber to continue contributing to APY account of the subscriber, for the remaining vesting period, till the original subscriber would have attained the age of 60 years instead of present provision of handing-over lump-sum amount to spouse on the premature death (death before 60 years of age) of the subscriber. The spouse of the subscriber shall be entitled to receive the same pension amount as that of the subscriber until the death of the spouse. After the death of both the subscriber and the spouse, the nominee of the subscriber shall be entitled to receive the pension wealth, as accumulated till age of 60 years of the subscriber. 

Earlier to address the longevity risks among the workers in unorganised sector and to encourage the workers in unorganised sector to voluntarily save for their retirement, the Government had launched a new initiative called Atal Pension Yojana (APY) with effect from 1st June, 2015. Under APY, each subscriber, on completion of 60 years of age, will get the guaranteed minimum monthly pension, or higher monthly pension, if the investment returns are higher than the assumed returns for minimum guaranteed pension, over the period of contribution. After the subscriber’s death, the spouse of the subscriber shall be entitled to receive the same pension amount as that of the subscriber until the death of the spouse. After the death of both the subscriber and the spouse, the nominee of the subscriber shall be entitled to receive the pension wealth, as accumulated till age of 60 years of the subscriber. In exceptional circumstances, that is, in the event of the death of beneficiary or specified illness, as mentioned in the PFRDA (Exit and withdrawals under the National Pension System) Regulations, 2015, before the age of 60 years, the accumulated pension wealth till date would be given to the nominee or the subscriber as the case may be.  

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