The Reserve Bank of India conducted a state government securities auction on July 7, 2026. States raised a combined ₹21,350 crore through this exercise. The auction attracted strong investor interest across multiple tenors and states.
Key Details of the State Government Securities Auction
Twenty state government securities went under the hammer in this auction. These covered states including Bihar, Chhattisgarh, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Kerala, Madhya Pradesh, Manipur, Sikkim, Telangana, Uttar Pradesh, Uttarakhand, and West Bengal. Additionally, several securities were re-issues of earlier bonds. Tenors ranged from 5 years to 26 years, offering investors a wide choice.
Competitive bids received across all securities totalled ₹61,764.85 crore. However, only ₹20,574.17 crore worth of competitive bids were accepted. This reflects a bid-to-cover ratio that signals healthy market demand. Meanwhile, non-competitive bids worth ₹775.83 crore also received full or partial allotment.
Cut-off Yields and Notable State Borrowings
Cut-off yields varied across states and tenors. For example, Uttar Pradesh’s 6-year bond saw the lowest cut-off yield at 7.14%, reflecting its shorter duration. In contrast, Telangana’s 30-year re-issue carried a cut-off yield of 7.6404%. Therefore, longer-tenor bonds generally attracted higher yields, as expected.
Madhya Pradesh raised the largest amount in a single security, borrowing ₹2,000 crore through a re-issue of its 7.90% SGS 2056. West Bengal’s 26-year bond also saw strong interest, with competitive bids of ₹4,920 crore against a notified amount of ₹2,200 crore. As a result, partial allotments applied to several securities where bids exceeded the notified amount.
What This Means for Investors
State government securities remain a popular choice among institutional investors seeking safe, sovereign-backed returns. The robust participation in this auction confirms continued confidence in state-level borrowings. Additionally, the wide range of tenors allows investors to match their portfolio needs effectively. Non-competitive bidders, including smaller participants, also secured allotments across most securities.
Overall, this state government securities auction reinforces the depth of India’s government bond market. It also highlights states’ active use of capital markets to fund development expenditure. Investors can expect similar auctions to continue through the 2026–27 fiscal year.
Source: RBI Press Releases
