State governments launch a ₹24,400 crore securities auction issue

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Highlights

Eleven states, including Andhra Pradesh, Maharashtra, and Madhya Pradesh, have scheduled an auction of government securities worth a total of ₹24,400 crore for 19 October 2026.
Up to 10% of each security will be allocated to eligible institutions and individuals under non-competitive bidding, while the minimum bid amount has been set at ₹10,000.
These securities will be considered SLR-eligible and will qualify for the ready forward facility, potentially supporting demand from banks and institutional investors.

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

Auction size and schedule

According to a press release by the Reserve Bank of India, Andhra Pradesh, Goa, Gujarat, Jammu and Kashmir, Madhya Pradesh, Maharashtra, Meghalaya, Punjab, Rajasthan, Telangana, and Tripura have offered State Government Securities of various tenors for sale. The total issue size is ₹24,400 crore, including several reissues alongside new securities.

The largest borrowers include Maharashtra, Madhya Pradesh, Rajasthan, and Telangana, while some states have offered reissued securities with fixed maturities and others have offered yield-based issues. The auction will take place on Monday, 19 October 2026, and the results will be announced on the same day, while successful bidders must make payment on Wednesday, 21 October 2026.

Competitive bids must be submitted on the E-Kuber system from 10:30 a.m. to 11:30 a.m., while non-competitive bids must be submitted from 10:30 a.m. to 11:00 a.m. Physical bids will be accepted only in the event of a system failure and must be submitted to the Public Debt Office before the deadline in accordance with the RBI's prescribed procedure.

Provisions for investors and market impact

Up to 10 percent of the notified amount of each security will be allocated to eligible individuals and institutions under the non-competitive bidding facility. The limit for a single bid in any one security will be up to 1 percent of its notified amount, while retail investors may also bid through the Retail Direct portal.

The RBI will determine the maximum accepted yield or minimum accepted price, and the securities will be issued at a minimum face value of ₹10,000 and in subsequent multiples of ₹10,000. Interest rates on new State Government Securities will be determined at the auction, while reissued securities will carry the rates set on the original issue date.

These investments will be considered eligible government securities investments for banks under the statutory liquidity ratio, SLR, and will also qualify for the ready forward facility. This is likely to support institutional demand for the state borrowing programme, especially at a time when banks and other investors continue to invest in government paper to meet statutory and portfolio requirements.

Our previous report on states' market borrowings for the third quarter of FY2027 discussed the sharp increase in the issuance of State Government Securities (SGS). The article noted that net SGS issuance is estimated to reach up to ₹2.3 lakh crore after redemption adjustments, with major borrowers such as Maharashtra playing a key role in the additional borrowing, alongside broader adoption of the Benchmark Issuance Strategy (BIS) by several states and Union Territories.

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