Auction Alert: RBI Pumps Up State Bond Sale to ₹52,120 Crore

Unknown Apr 02, 2026 800 Views

The Reserve Bank of India (RBI) has also issued a major revision in the scheduled state government securities (SGS) auction, increasing the overall amount to ₹52,120 crore compared to the initial planned amount of ₹40,120 crore. This follows states increasing their borrowing in the last quarter o...

Revised Auction Key Points

Auction Details

The revised auction of state government securities is scheduled for Tuesday, with the total amount increased to ₹52,120 crore, up from ₹40,120 crore.

The auction will be conducted on RBI’s Core Banking Solution (E-Kuber) platform, allowing both competitive and non-competitive bids.

Bidders must express expected yield or price up to two decimal points, and the minimum bid amount is ₹10,000, in multiples thereof.

The RBI will decide the maximum yield/minimum price for the accepted bids, and the outcome will be declared on the auction day.

State Borrowing and Participation

Of 13 participating states, Karnataka will borrow the most at ₹7,000 crore.

In the last auction, 20 states had raised ₹49,522 crore from debt sales.

States have borrowed ₹1 trillion already in the current month, showing increased fiscal requirements.

Market Conditions and Yields

Cut-off yield on the last auction for 10-year state bonds came in between 7.18% and 7.27%, above 7.17%–7.20% recorded in February.

The boost in auction size will be bound to drive up yields, as a 3–4 basis point rise in yield is seen coming due to liquidity shortages and tepid bids from long-term players and banks.

The banking system is currently experiencing a liquidity deficit of ₹2.07 trillion, contributing to the upward pressure on yields.

Settlement and Allotment

Successful bidders must make payments during banking hours on the day following the auction at RBI’s Mumbai and regional offices.

The new state government stocks will bear interest at rates determined by the auction and will be eligible for “When Issued” trading as per RBI guidelines.

Real-Time Update for May 3, 2025

Results of the auction conducted on May 2, 2025, have been declared, with settlement on May 5, 2025.

The increased auction amount indicates the continued upward trend of increased state borrowings and market responses to pressures of liquidity and demand.

Sources: Lexsite,Press Information Bureau (PIB) Press Release, April 28, 2025, Reserve Bank of India, Business Standard

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