Telangana joins select States for rollout of new strategy for State development loans by RBI

Telangana has joined the list of nine States where the Reserve Bank of India (RBI) is rolling out the Benchmark Issuance Strategy (BIS) for State development loans, starting from the current financial year.

The Apex Bank said that it has been sensitising the States about the adoption of BIS aimed at enhancing transparency and providing greater clarity to investors. The Strategy involves issuing securities in specific benchmark tenor buckets as per the pre-announced calender.

It is aimed at the issuance of securities in specific benchmark tenor buckets as per the pre-announced calendar. The framework is aimed at creating a larger, more liquid benchmark bonds improving price discovery and providing investors with better visibility into supply in the State bond market. It envisages the issuance of standardised benchmark bonds across specific tenors to reduce market fragmentation.

The RBI said it has decided to introduce BIS on a pilot basis in nine States including Telangana based on the concurrence of the respective State Governments, starting the financial year 2026-27. The State Government has accordingly submitted an indent for raising market borrowings to the tune of ₹18,900 crore during the first quarter of the current fiscal.

In line with the BIS, the State has decided to avail loans with different tenures ranging from six to 10 years to over 25 years. The tenure for ₹2,000 crore and ₹1,900 crore borrowings proposed on April 7 is 16-25 years and above 25 years, respectively.

The State has decided to raise ₹3,000 crore in three tranches on April 22, with maturity buckets (years) spread from 6-10 years, 11-15 years, and 21-25 years. Likewise, loans of ₹2,000 crore each would be raised in two tranches on May 5 with maturity bucket spread of 16-20 years and above 25 years respectively.