State governments offer a securities auction issue of ₹21,600 crore

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Highlights

Eight state governments will auction state government securities worth ₹21,600 crore on June 16, 2026, through the RBI's e-Kuber system.
Investors can invest a minimum of ₹10,000 and in multiples thereof, and eligible institutions will be allocated up to a maximum of 10 percent of the notified amount under the non-competitive bidding scheme.
Securities are eligible for SLR investment and ready forward facility, and the interest rates on new securities will be determined by auction conducted by RBI.

This article was translated from the original. Read the original version by our correspondent here.

Auction Structure and Schedule

According to the press release from the Reserve Bank of India, Andhra Pradesh, Assam, Gujarat, Jammu & Kashmir, Maharashtra, Punjab, Rajasthan, Telangana, and Uttarakhand are offering securities in this auction. The total issuance of ₹21,600 crore includes new borrowings of varying maturities as well as re-issuances of several existing State Government Securities.

Andhra Pradesh, Gujarat, Assam, Punjab, Rajasthan, and Uttarakhand are bringing yield-based auctions for new securities, while several states have opted for price-based auctions for re-issuances of previously issued securities. Some issuances from Maharashtra, Telangana, Punjab, Rajasthan, Jammu & Kashmir, and Andhra Pradesh are re-issuances of SGS originally issued in 2026.

Both competitive and non-competitive bids are submitted electronically on the RBI Core Banking Solution, e-Kuber system, on Tuesday, June 16, 2026. The window for competitive bids is from 10:30 a.m. to 11:30 a.m., while non-competitive bids are accepted from 10:30 a.m. to 11:00 a.m.

The auction results are announced on June 16, 2026, and successful bidders must make payment on Wednesday, June 17, 2026, during banking hours at Mumbai and the respective regional offices of the RBI. Physical bids are accepted only in the event of a system failure.

Provisions for Investors and Banking Impact

Up to 10 percent of the notified amount of each security is allocated to eligible individuals and institutions under the non-competitive bidding facility scheme. For a single bid in any security, this limit is capped at 1 percent of its notified amount, and retail investors can also bid through the Retail Direct portal.

The minimum nominal investment amount is ₹10,000, and investments can be made in multiples of ₹10,000 thereafter. Bidders enter the expected annual yield or price up to two decimal places, and an investor may submit multiple competitive bids at different rates or prices within the notified amount limit for a single state.

The interest rates on new securities are determined by RBI in the auction, with semi-annual interest payable each year on December 17 and June 17. For re-issued securities, interest is paid semi-annually at the rate fixed on the original issue date, up to maturity.

These securities are governed by the provisions of the Government Securities Act, 2006, and the Government Securities Regulations, 2007. For banks, these investments qualify as eligible government securities for the statutory liquidity ratio (SLR) under Section 24 of the Banking Regulation Act, 1949, and are also eligible for ready forward facility.

Our previous report on steps taken by RBI and the central government to boost foreign capital inflows into government securities highlighted that FPIs were granted tax relief on interest income and capital gains from government bonds, and the scope of the Fully Accessible Route was expanded. The article also noted that arrangements such as FCNR(B) deposits and forex swap windows were enhanced to increase foreign exchange liquidity, which is expected to ease balance of payments and banking funding pressures.

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