RBI will issue state government bonds worth ₹18,100 crore in the July 28 auction

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Highlights

RBI will conduct an auction of ₹18,100 crore state government bonds on the E-Kuber platform on July 28, 2026, including re-issues from Maharashtra and Punjab.
10 percent of each stock in the non-competitive bid will be allocated to eligible institutions, while retail investors can bid through the Retail Direct portal.
These government securities will be eligible for SLR and certified interest rates will be determined by RBI, with interest paid semi-annually on January 29 and July 29.

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

Auction Structure and Participation Process

As stated in the press release issued by the Reserve Bank of India, this auction will be conducted on the Reserve Bank of India's Core Banking Solution, E-Kuber, on Tuesday, July 28, 2026. Competitive bids can be submitted electronically from 10:30 AM to 11:30 AM, and non-competitive bids from 10:30 AM to 11:00 AM.

This total issuance of ₹18,100 crore includes several re-issues from Maharashtra, Punjab, and other states. Maharashtra has also provided an additional borrowing option with bonds maturing in 2031, 2039, and 2049, while Punjab has given an extra borrowing window for issues maturing in 2030 and 2039.

Under the non-competitive bidding facility scheme, up to 10 percent of the notified amount of each stock is allocated to eligible individuals and institutions, though for a single bid, this limit is up to 1 percent of the notified amount of the respective stock. Retail investors can also place non-competitive bids through the Retail Direct portal, while physical bids are accepted only in case of system failure.

Interest, Settlement, and Impact on the Banking Sector

The auction results are announced on July 28, 2026, and successful bidders must make payment during banking hours on Wednesday, July 29, 2026. The interest rates on new State Government Stocks are determined by RBI in the auction, while re-issued securities carry the rates set at the original issue date.

Interest on new stock is paid semi-annually on January 29 and July 29 each year until maturity. The minimum investment is set at ₹10,000 and thereafter in multiples of ₹10,000, while bidders can enter yield or price up to two decimal places.

These securities are governed by the provisions of the Government Securities Act, 2006 and Government Securities Regulations, 2007. For banks, these investments are considered eligible government securities for Statutory Liquidity Ratio (SLR) purposes, and these stocks are also eligible for ready forward facility.

Our previous report discussed the changes being made by NSE Indices Limited in the Nifty SDL Jul 2026 Index from July 27, 2026. It mentioned the inclusion of 91 DTB 30,072,026 (ISIN IN2,026X40) in the index and the arrangement to reinvest redemption proceeds into the CCIL TREPS overnight rate if the last T-Bill matures before the index maturity date, to help maintain pre-maturity cash management and return profile.

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