Market Borrowing Programme of State Government by Auction (20 Ex II 1 v2)
The Government of Tamil Nadu, Finance Department, issued Notification No. 396(L)/W&M-II/2019 on January 18, 2019, announcing the reissue and auction of the 8.08% Tamil Nadu State Development Loan 2028 for a nominal aggregate amount of Rs. 1000.00 crore. It governs a State borrowing through government securities and does not contain provisions about land ownership, registration, planning permission or property transactions.
What the notification does
The Government of Tamil Nadu, Finance Department, published Notification No. 396(L)/W&M-II/2019 to raise money by reissuing the 8.08% Tamil Nadu State Development Loan 2028. The notified nominal amount is Rs. 1000.00 crore.
The loan is intended to finance part of the State's capital expenditure and other development schemes under execution. The notification also records that the Central Government consent required under Article 293(3) of the Constitution of India was obtained.
The sale is governed by the conditions in Notification No. 396(L)/W&M-II/2019 and the conditions in General Notification No. 170 (L)/W&M-II/2007, dated July 19, 2007.
Who it affects
Notification No. 396(L)/W&M-II/2019 mainly affects bidders and investors in Tamil Nadu government securities, including eligible individuals, institutions and banks. It does not set out any requirement affecting a land buyer, landowner, developer or property registration applicant.
Banks may count the government stock as an eligible investment in government securities for Statutory Liquidity Ratio purposes under Section 24 of the Banking Regulation Act, 1949. The stock also qualifies for the ready forward facility.
Auction and allotment
Key auction provisions include:
- The Reserve Bank of India, Mumbai Office (PDO), Fort, Mumbai, was to conduct the auction on January 22, 2019.
- Competitive and non-competitive bids had to be submitted electronically through the Reserve Bank of India Core Banking Solution, E-Kuber System.
- Up to 10% of the notified sale amount could be allotted to eligible non-competitive bidders.
- A single non-competitive bid was limited to a maximum of 1% of the notified amount.
- The Reserve Bank of India was to display the auction result on its website on the same day.
- Successful bidders had to make payment on January 23, 2019 before the close of banking hours, using one of the payment methods listed in the notification.
Interest and repayment
The government stock has a 10 year tenure beginning December 26, 2018. Interest accrues at 8.08% per year on the nominal value from the original issue date and is payable half yearly on June 26 and December 26. The loan is repayable at par on December 26, 2028.
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Common questions
Does this notification affect the title or registration of my property in Tamil Nadu?
No property title, registration, planning permission or land transaction provision appears in Notification No. 396(L)/W&M-II/2019. It concerns the auction of Tamil Nadu government securities.
What amount did the Tamil Nadu Government propose to borrow?
The Government of Tamil Nadu notified the reissue of the 8.08% Tamil Nadu State Development Loan 2028 for a nominal aggregate amount of Rs. 1000.00 crore.
When will the Tamil Nadu State Development Loan 2028 be repaid?
The loan is repayable at par on December 26, 2028.
How often is interest paid on the government stock?
Interest at 8.08% per year is payable half yearly on June 26 and December 26.
