10 more jurisdictions to come
The Reserve Bank of India (RBI) on Friday extended its pilot benchmark issuance strategy (BIS) for state government securities to 10 more jurisdictions, including nine states and the Union Territory of Delhi, while indicating that states and Union Territories are expected to raise ₹3.19 trillion through market borrowings during the July-September quarter of the current fiscal, lower than market expectations of ₹3.4 trillion-₹3.5 trillion. Is.
“The borrowing amount is less than our estimate of ₹3.5 trillion,” said a dealer at a primary dealership. “This should have some positive impact, with yields on the benchmark 10-year government bond likely softening by 1-2 basis points,” the person said.
The BIS framework, introduced on a pilot basis with nine states in Q1FY27, includes issuance of State Development Loans (SDLs) in pre-announced benchmark maturity buckets to improve transparency and provide greater clarity to investors. From the second quarter, the framework will also cover Delhi, Himachal Pradesh, Jharkhand, Manipur, Meghalaya, Odisha, Punjab, Sikkim, Uttarakhand and West Bengal, taking the total number of participating jurisdictions to 19.
These states will issue securities in pre-determined benchmark maturity periods in line with pre-announced borrowing calendar.
The move aims to reduce fragmentation in the SDL market by focusing issuance in standardized tenors, thereby creating larger and more liquid benchmark securities. This is expected to increase price discovery and provide investors with better visibility on supply.
“Expanding the benchmark issuance strategy should improve liquidity in select SDL tenors over time. As more states adopt the framework, pricing efficiency and investor participation are likely to improve,” said a dealer at a state-owned bank.
The RBI released an indicative borrowing calendar for the 18 states and Delhi that have adopted the framework, while a separate calendar was released for the remaining states and Union Territories, which the central bank said are also expected to adopt the BIS going forward.
The central bank said the actual size of individual auctions and those of participating states will depend on the borrowing requirements, approval from the Center under Article 293(3) of the Constitution and prevailing market conditions. The RBI said it may revise the dates and amounts of the auction in consultation with the respective state governments and union territories.
The gross amount raised by states through State Government Securities (SGS) increased to ₹12.76 trillion in 2025-26 from ₹10.73 trillion last year. The amount raised as a percentage of total sanctions during the year increased from 91.4 per cent to 93.6 per cent in 2024-25.
During 2025-26, 19 states or union territories availed the special drawing facility, 11 of them resorted to Ways and Means Advance (WMA) and 10 used overdraft on some occasions.
The WMA limit for the central government was fixed at ₹1.5 trillion for the first half of 2025-26 and ₹0.5 trillion for the second half.
