State governments offer to raise ₹23,300 crore in the October 27 auction

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State government auction offer

Highlights

State governments will issue securities with tenors of 9 and 14 years to raise ₹23,300 crore in the auction on October 27.
Tamil Nadu will raise ₹9,000 crore, Uttar Pradesh ₹3,500 crore and Kerala ₹1,500 crore, while other states will borrow in varying amounts.
These securities will qualify for SLR, interest rates will be determined at the auction, and they will support the banking sector and institutional demand.

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

Auction size and schedule

According to a press release issued by the Reserve Bank of India, Assam, Bihar, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Kerala, Manipur, Nagaland, Sikkim, Tamil Nadu, Uttar Pradesh and Uttarakhand are offering securities in the auction. The total issuance of ₹23,300 crore includes new borrowings with tenors of 9 years and 14 years, as well as reissues of previously issued State Development Loans by several states.

Among the largest borrowers, Tamil Nadu is offering to raise ₹9,000 crore, Uttar Pradesh ₹3,500 crore and Kerala ₹1,500 crore. Bihar and Gujarat are each issuing ₹2,000 crore, while Assam is issuing ₹1,000 crore; the other states are offering comparatively smaller amounts.

The auction will be held on Tuesday, October 27, 2026, on the RBI's e-Kuber system, its core banking solution. Competitive bids will be submitted electronically from 10:30 a.m. to 11:30 a.m., and non-competitive bids from 10:30 a.m. to 11:00 a.m.

The RBI says physical bids will be accepted only in the event of a system failure. The results of successful bids will be announced on October 27, 2026, and payment will be made on Wednesday, October 28, 2026, during banking hours in Mumbai and at the RBI's relevant regional offices.

Investor rules and market impact

Up to 10 percent of the notified amount of each security is allocated to eligible individuals and institutions under the Scheme for Non-Competitive Bidding Facility, although the limit for any single bid is 1 percent of that security's notified amount. Retail investors can also participate in the non-competitive category through the RBI Retail Direct portal.

Bidders enter the yield or price to two decimal places, and an investor may submit more than one competitive bid at the same or different yield and price levels. However, the total bid amount submitted for any one state cannot exceed its notified amount.

The RBI sets the maximum acceptable yield or minimum price. Securities are issued in a minimum denomination of ₹10,000 and in multiples of ₹10,000 thereafter.

Interest rates on new state government securities are determined at the auction, and interest is paid semi-annually on April 28 and October 28 each year until maturity. Reissued securities earn interest semi-annually at the rate set on the original issue date.

For the banking sector, these investments qualify as government securities under the Statutory Liquidity Ratio (SLR). The securities are also eligible for Ready Forward transactions, supporting liquidity in the state government borrowing market and institutional demand.

Our previous article discussed the states' State Government Securities (SGS) issuance calendar for Q3 FY2027 and the sharp increase in market borrowing. It noted that net SGS issuance is expected to rise after redemptions are accounted for, with a few large states expected to account for a significant share of additional borrowing. The article also referred to the number of states adopting the Benchmark Issuance Strategy (BIS) and their share of planned quarterly borrowing.

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