Post News Network
Bhubaneswar, Dec 5: The state government has issued fresh notification to raise Rs 500 crore from the open market via sale of government securities of six year tenure.
“The amount so raised would be used to finance capital outlay in connection with creation of capital assets,” the notification said.
The government stock would be sold through Reserve Bank of India (RBI) by auction at a coupon rate to be determined by the central bank, it added.
Auction is scheduled to be held on December 8. Bids for the auction are to be submitted in electronic format on RBI’s core banking solution system. Successful bidders would make payments on December 9 before close of banking hours.
Notably, investment in government stock will be reckoned as an eligible investment in government securities by banks for the purpose of Statutory Liquidity Ratio (SLR) under Section 24 of the Banking Regulation Act, 1949.
Last month, the state government had raised Rs 1,000 crore through 5-year bonds at an attractive yield of 8.03 per cent, which is lesser than other state government bonds.
As per budgetary provisions for this year, the state could borrow Rs 6,000 crore during this fiscal.
Interestingly, the state government had refrained from market borrowing 2006-2007 onwards. Last time, it had raised money from the market during 2005-06.
Market borrowing is one of the routes available to a state government to meet deficit along with creation of capital asset.
