State Loan Auctions Close Below Target As RBI Announces Cut-Off Yields

The Reserve Bank of India (RBI) released auction results for multiple state government securities (SGS) re-issues and fresh loans on December 9, 2025. Despite strong participation, the total mobilization of 154.99 billion rupees was below the planned 159.64 billion rupees, highlighting cautious investor appetite in the current interest rate environment.  

Key highlights from the announcement include  

• Maharashtra’s 10-year loan closed at a cut-off yield of 7.29%, while its 20-year loan was set at 7.48%.  
• Re-issue of Maharashtra’s 7.20% SGS 2034 saw a cut-off yield of 7.2703%.  
• Tamil Nadu’s re-issues included 7.18% SGS 2036 at 7.3306%, 7.20% SGS 2035 at 7.3197%, 7.18% SGS 2033 at 7.2498%, and 7.09% SGS 2032 at 7.1986%.  
• Arunachal Pradesh recorded a cut-off yield of 7.55%, Bihar at 7.60%, and Gujarat at 7.19%.  
• Haryana’s 16-year and 17-year loans both closed at 7.52%.  
• Jammu & Kashmir, Meghalaya, and Mizoram posted yields of 7.65%, 7.57%, and 7.62% respectively.  

The auction results underline rising borrowing costs for states, with yields reflecting tighter liquidity conditions and investor caution. Analysts suggest that while demand remains steady, higher yields could pressure state finances in the coming quarters.  

Sources: Reserve Bank of India, Business Standard, Economic Times, Mint