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RBI Raises State Bond Auction Size to ₹52,120 Crore

18 March 20251 min read
BANKING & FINANCERBI Raises StateBond Auction Sizeto ₹52,120 Crore18 March 2025safalsetu.com

Why in the news

RBI enlarged the state bond auction amid tight liquidity.

Key facts

  • In the previous auction, 20 states raised ₹49,522 crore.
  • Yields rose on heavy supply and weak demand from long-term investors; banks held back due to liquidity constraints.

Concerns

  • Oversupply and weak demand make borrowing harder for states.
  • Market players will watch appetite for state debt as financial conditions tighten.

Exam angle

  • Largest borrower this round: Karnataka.
  • Higher supply with weak demand pushes yields up.

Test yourself

1. To what amount did RBI revise the scheduled state bond auction?

The auction was raised to ₹52,120 crore from ₹40,120 crore.

2. Which state planned the highest borrowing in the current state bond auction?

Karnataka planned to borrow ₹7,000 crore.

3. What was the main reason for higher yields in the last state bond auction?

Yields rose on heavy supply and lack of long-term investor demand.

This topic is part of Daily Current Affairs 18 March 2025 (27 topics).

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