On 19-9-2025, the Reserve Bank of India (‘RBI’) announced the auction of State Government Securities (SGS), aimed at facilitating state-level fundraising through the sale of bonds to support long-term development, infrastructure, and fiscal planning. The auction was conducted on 23-09-2025.
Key points:
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The auction saw participation from eleven state governments, each aiming to raise funds through a combination of new issuances and re-issues of existing securities.
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It was conducted via the RBI’s Core Banking Solution platform, E-Kuber.
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The tenors ranged from 7 to 26 years, with both yield-based and price-based auctions depending on the nature of the securities.
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The SGS qualify as eligible investments for Statutory Liquidity Ratio (‘SLR’) and are permitted under the ready forward facility, making them attractive to banks, financial institutions, and retail investors.
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Non-competitive bids were also accepted, with retail and institutional investors participating through the RBI Retail Direct portal. The minimum bid size was ₹10,000 and in multiples thereof.
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The RBI announced the auction results on 24-9-2025.
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The auction received strong interest, with 1,487 competitive bids totalling over ₹1.27 lakh crore.
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Telangana led the borrowing, raising ₹5,000 crore across four tranches (22—26 years) at a uniform yield of 7.44%.
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Bihar followed with ₹4,000 crore through 20- and 25-year securities at 7.45%.
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Tamil Nadu raised ₹4,000 crore via new and re-issued bonds, with yields between 7.02% and 7.26%, while Madhya Pradesh secured ₹3,000 crore at 7.43% and 7.44% for 18- and 21-year tenors.
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Maharashtra raised ₹1,000 crore through an 11-year bond at 7.27% but declined bids for its re-issued 2045 and 2046 papers.
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West Bengal mobilized ₹2,500 crore, including ₹1,500 crore via a re-issue of its 2044 bond at 7.4489%, and ₹1,000 crore through a new 11-year bond at 7.42%
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Other states like Kerala, Gujarat, Rajasthan, Punjab, and Chhattisgarh also participated, each contributing through varied maturities and instruments.
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Gujarat’s 7-year bond cleared at 7.07%, Kerala’s 25-year at 7.44%, Punjab’s re-issued 2033 at 7.3886%, Rajasthan’s 10-year at 7.32%, and Chhattisgarh’s re-issued 2029 bond at ₹101.14 with a yield of 6.6691%.
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Overall, weighted average yields hovered around 7.4%, reflecting steady investor demand in an auction that raised the total allotment of ₹25,000 crore out of the ₹27,000 crore notified.
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The funds raised through SGS auctions are primarily used by State Governments for:
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Financing developmental and infrastructure projects
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Meeting fiscal deficits and budgetary requirements
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Managing day-to-day expenditures and public welfare schemes
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Servicing existing debt and refinancing maturing obligations
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