RBI offers ₹21,700 crore borrowing for 12 states and a union territory in auction

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RBI state borrowing auction

Highlights

RBI offered a total borrowing of ₹21,700 crore for 12 states and union territories in the auction scheduled for July 21, 2026.
Major borrowers among the states in yield-based new securities and price-based re-issues are Madhya Pradesh, West Bengal, Uttar Pradesh, and Kerala.
The new securities are eligible for banks' SLR investments, interest rates will be determined in the auction, and payment will be made on July 22, 2026.

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

Size and Schedule of the Auction

According to the RBI press release, Assam, Bihar, Chhattisgarh, Delhi, Jammu and Kashmir, Kerala, Madhya Pradesh, Odisha, Tamil Nadu, Uttar Pradesh, Uttarakhand, and West Bengal are offering to raise funds from the market in this auction. The auction includes yield-based new securities and price-based re-issues, with the total issue amount set at ₹21,700 crore at face value.

Among the states, Madhya Pradesh, West Bengal, Uttar Pradesh, and Kerala are among the major borrowers, while Bihar, Odisha, Assam, and Uttarakhand are offering securities of varying maturities. Chhattisgarh, Delhi, Jammu and Kashmir, Tamil Nadu, Uttar Pradesh, and Kerala are also raising funds from the market through re-issues of previously issued stock.

The auction will be held electronically on RBI's Core Banking Solution, E-Kuber, on Tuesday, July 21, 2026. Competitive bids must be submitted between 10:30 am and 11:30 am, and non-competitive bids between 10:30 am and 11:00 am, while physical bids are accepted only in case of technical failure.

Investor Participation and Impact on the Banking Sector

Up to 10 percent of the notified amount of each stock is allocated to eligible individuals and institutions under the non-competitive bidding facility, though the limit for a single bid is up to 1 percent of the notified amount of the respective stock. Retail investors can also participate in this scheme through the RBI Retail Direct portal.

RBI determines the maximum acceptable yield or minimum acceptable price, and the stock is issued at a minimum nominal value of ₹10,000 and in multiples of ₹10,000 thereafter. The auction results are announced on July 21, 2026, and successful bidders must make payment on Wednesday, July 22, 2026, during banking hours.

The interest rates on new State Government Stocks are determined in the auction, and interest is paid semi-annually on January 22 and July 22 each year. These securities are considered eligible government investments for banks under the Statutory Liquidity Ratio (SLR) and are also eligible for ready forward facility, providing liquidity and investment options to both the banking system and the state borrowing market.

In our previous report, we covered the determination of redemption prices for two series of Sovereign Gold Bonds (SGB) maturing in July 2026—SGB 2020-21 Series X and SGB 2021-22 Series IV. It was mentioned that the redemption price will be based on the simple average of the closing price of 999 purity gold as published by IBJA per gram, providing investors with clarity on cash flow and settlement before maturity.

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