Nine Indian States Raise ₹245.70 Billion Through State Loans

Anirudh Jain - Kolkata Bureau Jul 14, 2026 1,300 Views

Summary Nine Indian states raised ₹245.70 billion in a recent RBI-conducted auction, falling slightly short of the ₹248 billion target. The auction included multiple re-issued securities and fresh loans across varying tenures, with Maharashtra, Andhra Pradesh, and Gujarat among the key participants in the state debt market.

Nine Indian states collectively raised ₹245.70 billion through the auction of State Government Securities (SGS) on July 14, 2026. The total amount raised was marginally below the initially targeted ₹248 billion, according to data released by the Reserve Bank of India (RBI). The auction saw states securing funds at varying cut-off yields, reflecting ongoing market assessments of regional fiscal health and national interest rate trends.

The borrowing process, facilitated by the RBI, involved both the issuance of new loans and the re-issue of previously auctioned securities to manage state-level budgetary requirements. Market participants observed that while demand remained steady, the slight shortfall in the total target suggested a cautious approach from investors amid fluctuating liquidity conditions in the bond market.

Breakdown of State Government Securities (SGS) Auction

The RBI auction highlighted specific borrowing costs for different tenures and states. Significant activity was noted in the re-issue of existing securities, which allows states to tap into markets for additional funding without creating new instruments.

The cut-off yields for the re-issued securities were as follows:

Andhra Pradesh 2043 SGS: Re-issued at 7.7183%.
Maharashtra 2039 SGS: Re-issued at 7.6003%.
Telangana 2037 SGS: Re-issued at 7.6067%.
Maharashtra 2034 SGS: Re-issued at 7.3979%.
Rajasthan 2049 SGS: Re-issued at 7.7097%.
Maharashtra 2031 SGS: Re-issued at 7.0383%.
Rajasthan 2035 SGS: Re-issued at 7.5094%.
Punjab 2044 SGS: Re-issued at 7.7092%.

In addition to the re-issues, the RBI reported cut-off yields for fresh loan issuances: Andhra Pradesh secured a 10-year loan at 7.51%, while Gujarat raised funds through a 9-year loan at 7.38% and a 12-year loan at 7.51%.

Market Implications and Fiscal Context

The RBI manages the auction of State Government Securities to ensure that state-level debt markets remain orderly. The yields secured by states in this auction provide a benchmark for regional fiscal performance. Investors in these securities generally include pension funds, insurance companies, and banks, which utilize SGS for their statutory liquidity ratio (SLR) requirements and as part of their long-term, low-risk investment portfolios.

For businesses and observers of the Indian economy, these borrowing figures are critical indicators of state-level capital expenditure trends. While the states fell slightly short of their aggregate target, the ability to raise significant capital at these rates demonstrates sustained market confidence in sovereign-backed state debt.

Official Sources

Why It Matters

This auction serves as a vital barometer for state-level borrowing costs in India. For investors, the variation in yields across different states and tenures offers insight into how markets price the risk associated with various state budgets. For citizens, the success of these auctions ensures that state governments maintain the liquidity required to fund ongoing public infrastructure projects and essential administrative functions.

Key Facts at a Glance

Total Funds Raised: ₹245.70 billion.
Target Amount: ₹248 billion (under-subscription).
Participating States: Nine Indian states.
Security Types: A mix of fresh 9–12 year loans and various re-issued long-term securities.
Role of RBI: The central bank acts as the debt manager for both central and state governments to stabilize borrowing.

FAQ

What are State Government Securities (SGS)? SGS are debt instruments issued by Indian states to meet their financial requirements. They are considered safe, sovereign-backed investments.

Why did the states raise less than the targeted amount? Under-subscription in state debt auctions can occur due to various factors, including market liquidity shifts, investor appetite for specific tenures, or state-specific fiscal policy decisions during the bidding process.

How does the RBI determine the cut-off yield? The RBI conducts an auction where investors submit bids at different yields. The cut-off yield is the highest rate at which the state accepts the bids to meet its target borrowing amount.

Source: Reserve Bank of India, CCIL