RBI Raises ₹17,000 Crore in State Government Securities Auction: Full Details, Yields, and Impact Explained

RBI Raises ₹17,000 Crore in State Government Securities Auction: What It Means

The Reserve Bank of India (RBI) has successfully raised ₹17,000 crore through a recent auction of state government securities (SGS) held on 20 October 2025.

In this article we break down:

1. What exactly happened?

On 20 October 2025, the RBI conducted an auction of state government securities (SGS) on behalf of several state governments. The total notified amount for the auction was ₹17,000 crore, and that full amount was raised via the auction.

Key details:

The auction included eleven separate securities issued by five states: Chhattisgarh, Maharashtra, Rajasthan, Tamil Nadu and Uttar Pradesh. 

Competitive bids received totaled ₹69,599.48 crore across 780 bids; out of which ₹16,607.85 crore were accepted in competitive bidding. Non-competitive bids of ₹392.15 crore were also allotted in full. 

The securities covered tenors ranging from 7 years to 26 years. Yields (cut-off yields) ranged broadly between about 6.99% to 7.36%. 

State-wise breakdown:

Chhattisgarh raised ₹2,000 crore via two tranches (15-year maturing 2040 & 11-year maturing 2032). Yields: ~7.34% & ~7.04%. 

Maharashtra raised ₹5,000 crore via four securities (including re-issues) with yields between ~7.13% and ~7.29%. 

Rajasthan raised ₹5,000 crore through three tranches (10-year, 26-year and a re-issue) with yields between ~7.19% and ~7.36%. 

Tamil Nadu raised ₹4,000 crore via four securities (maturities 2032, 2035, 2055 etc.). The lowest yield in the auction was for Tamil Nadu’s 7-year 2032 security at ~6.99%. 

Uttar Pradesh raised ₹2,000 crore via a 10-year security maturing in 2035, with cut-off yield ~7.15%. 

2. Why is this important?

2.1 For the states

The auction enables state governments to raise long-term funds to finance infrastructure, social development, and general budget requirements. Borrowing via SGS (also known as State Development Loans or SDLs) is a key part of state financing.

For example: the states were earlier reported to plan borrowing of about ₹17,000 crore in the upcoming week of the auction.

The fact that the full notified amount (₹17,000 crore) was raised shows strong liquidity and investor appetite for state debt at current yields.

2.2 For investors & the bond market

Investors—banks, insurance companies, mutual funds, pension funds—look for relatively safe fixed-income instruments. State securities, while carrying slightly higher yields than central government securities, are still considered relatively safe in the Indian context.
The yields between ~6.99% and ~7.36% provide a reference for long-term cost of funds for states.

Also, the strong bid amount (~₹69,600 crore) versus accepted amount (~₹16,600 crore) indicates oversubscription, which suggests demand is healthy.

2.3 For the economy and fiscal policy

From a macro perspective, the borrowing by states needs to be well-managed to avoid crowding out the central government or creating excessive liability burdens. Within the Constitution and debt management rules (such as under Article 293 and RBI Act), states’ borrowings are supervised. The RBI handles much of the process. 

A well-functioning auction mechanism with good demand and manageable yields is a positive sign for fiscal stability. On the other hand, if yields were significantly higher or bids poor, it could signal stress.

3. Key terms & concepts explained

Here are some important terms you should know in the context of this auction:

Term	Meaning
State Government Securities (SGS) or State Development Loans (SDLs)	Long-term debt instruments issued by state governments, intermediated by RBI. As explained by RBI: “State Governments issue only bonds or dated securities, which are called SDLs.”
Notified amount	The total amount the issuer (state) plans to raise via the auction.
Competitive bid	Investors submit bids specifying the yield or price they are willing to accept. Successful bidders are those at or below (in yield) the cut-off.
Non-competitive bid	A limited portion reserved for smaller investors, allowing them to participate without specifying yield; allocated at cut-off.
Cut-off yield	The highest yield accepted in the auction. Bidders bidding at or below that yield get allotment.
Tenor / maturity	How long until the bond matures (e.g., 7-year, 26-year).
Re-issue	When a bond that was already issued earlier is issued again (with same maturity etc).

Understanding these helps one follow such auctions and their implications.

4. What this auction says about current trends

4.1 Wider yield levels

The yields paid by states are in the ~7% range for long-tenors. That reflects market expectations of inflation, credit risk (though limited), and demand/supply of long-term funds. The 7-year Tamil Nadu issue at ~6.99% shows stronger demand for shorter long-tenors.

4.2 Borrowing across tenors

The states have opted for a mix of tenors — from 7 years up to 26 years. This reflects a strategy of balancing maturity profiles rather than piling up very long maturities only.

4.3 Strong demand vs large supply

With competitive bids ~₹69,600 crore versus notified amount ₹17,000 crore, there's clear investor appetite. This could suggest states have a favorable window to borrow.

4.4 Fiscal management signals

The successful auction reinforces that states are able to raise long-term funds. However, states will need to use the funds productively (infrastructure, human development) because future servicing of debt depends on generating adequate returns or tax bases.

4.5 Implications for market participants

For banks, insurers etc., these state bonds offer yield pick-up while having relatively low risk. For fund managers, the yields provide benchmarks. For retail investors (through mutual funds etc.) the state securities market remains an important element of long-term portfolios.

5. Who borrowed how much — and for what maturity?

Let’s break down state by state for clarity:

Chhattisgarh: Raised ₹2,000 crore from two tranches (maturities 2032 & 2040). Yields ~7.04% & ~7.34%.

Maharashtra: ₹5,000 crore via 4 securities (including maturities 2034, 2036, 2041, 2050) with yields between ~7.13%–7.29%.

Rajasthan: ₹5,000 crore through 10-year, 26-year and a re-issued 2043 bond. Yields ~7.19%–7.36%.

Tamil Nadu: ₹4,000 crore via four papers (2032, 2035, 2055 etc). The shortest maturity (7-year) carried ~6.99% yield; longest (~2055) around ~7.35%.

Uttar Pradesh: ₹2,000 crore via one 10-year bond maturing 2035, yield ~7.15%.

This mix shows states borrowing not only shortish tenors but also very long maturity papers (25-26 years) to lock in long-term funding.

6. What are the potential risks & considerations?

While the auction outcome is positive, there are a few caveats and risks to watch:

6.1 Debt servicing burden

Longer maturities lock in funds for long periods but also commit states to interest payments over decades. If economic growth slows or revenue underperforms, servicing this debt may become tougher.

6.2 Market risk & future yields

If interest rates rise in the future, states issuing now at ~7% may look favorable compared to future issuances at higher costs. However, current investors may face price risk in secondary market if yields increase.

6.3 Over-borrowing & crowding out

If states borrow too aggressively, this could crowd out private investment by pushing up interest rates or limit fiscal policy flexibility.

6.4 Credit risk perception

While state securities are generally safe in India, risks like state revenue shortfalls, unforeseen expenses, or contingent liabilities (e.g., on guarantees) can increase perception of risk, thereby pushing yields up.

6.5 Allocation & use of funds

The key is that borrowed funds should be used productively (e.g., infrastructure, human capital) rather than primarily for current consumption. Effective use determines whether the debt is sustainable.

7. Implications for different stakeholders

7.1 For states

· Borrowing at favorable yields allows states to plan long-term projects.

· States will need to align revenue growth with expenditure to ensure debt remains sustainable.

· They should manage maturity profiles and not concentrate borrowing too heavily in very long tenors.

7.2 For investors

· State securities remain attractive for stable, long-term fixed income.

· Yields achieved in this auction (~7%) set a benchmark for future issuances.

· Investors need to monitor secondary market price movements and credit dynamics of states.

7.3 For policymakers & economy

· Stable state borrowing is key for overall fiscal health of the country.

· RBI’s management of state borrowings (including auction calendar, tenor spread) is important to avoid market disruptions.

· This auction outcome suggests one more instance of smooth functioning of state-government borrowing mechanism.

8. summary

If you’re writing about this topic, here are keywords you may want to include for SEO:

 “₹17,000 crore SGS auction”

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 “State development loans yield India”

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 “State government securities yield 6.99-7.36%”

Ensure you mention the borrowing amount, states involved, yields, and broader implications to make your content comprehensive and search-engine friendly.

9. Frequently Asked Questions (FAQ)

Q1. What are State Government Securities (SGS) or State Development Loans (SDLs)?
A: These are long-term bonds issued by state governments (with RBI’s involvement) to raise funds. They are similar to central government securities (G-Secs) but issued by states. According to RBI: “State Governments issue only bonds or dated securities, which are called SDLs.” 

Q2. Why did this auction raise ₹17,000 crore?
A: The notified amount for the auction was ₹17,000 crore. The states had planned to borrow this sum and the market accepted it, reflecting sufficient demand. 

Q3. What does ‘cut-off yield’ mean in this context?
A: Cut-off yield is the highest yield accepted by the auction for successful bids. For example, if many bidders offer lower yields, the highest acceptable one becomes the cut-off. Bidders who bid at yields below or equal to that rate get allotment.

Q4. Why are yields important?
A: Yields represent the cost of borrowing. Lower yields mean the issuer (state) is paying less interest, which is favorable. For investors, yields indicate the return they will earn if they hold the bond till maturity.

Q5. Are SGS risk-free like central government securities?
A: SGS are considered fairly safe, but they carry somewhat higher risk compared to central government securities, because the issuer is a state government and not the national government. Revenue performance and state finances matter.

Q6. What are the implications for taxpayers and citizens?
A: When states borrow, they commit to servicing that debt over many years. The hope is that the funds will be used for infrastructure and growth, which in turn improves employment, income and revenues. If used well, citizens benefit; if mismanaged, the debt burden could impact future budgets and public services.

Q7. Can retail investors participate in such auctions?
A: Retail investors do participate, often via mutual funds or via non-competitive bidding in some auctions. The RBI’s FAQ on government securities explains participation details.

Q8. What does this mean for future state borrowings?
A: The successful auction suggests states currently have access to funds at manageable yields. It also sets a benchmark for future issuances. However, states will need to keep borrowing prudently, maintain creditworthiness, and manage maturity profiles to avoid high cost or market stress.

10. Conclusion

The ₹17,000 crore SGS auction conducted by the RBI on 20 October 2025 is a strong indicator of healthy state-government borrowing markets in India.

With a wide investor participation (competitive bids ~₹69,600 crore) and yields in the ~6.99-7.36% range, states such as Chhattisgarh, Maharashtra, Rajasthan, Tamil Nadu and Uttar Pradesh have successfully locked in long-term funds for their development agendas.

For states, this borrowing eases funding constraints and allows for project planning. For investors, the yields and strong demand reflect confidence in the state securities segment.

For the broader economy, it demonstrates that the mechanisms of state borrowing remain functional and effective—so long as debt is used productively and fiscal discipline is maintained.

However, the success of such borrowing depends on how well the funds are utilized, how states service their debt, and how future market conditions evolve. Yields remain sensitive to macro-economic trends (inflation, central bank policy), credit perception of states and the balance between supply and demand in bond markets.

In summary, this auction is more than just a number—it is a key piece in India’s fiscal architecture. It reflects the interplay of state finances, investor demand, market logic and macro-policy.

As stakeholders—whether citizens, investors or policymakers—keep an eye on such developments, the real focus should remain on outcomes: growth, infrastructure, employment and sustainable finance.

“RBI state government securities auction 2025”

Cash at Home Limit in India: What You Can Keep Legally as per Income Tax Rules

How Much Cash Can I Keep at Home in India? What the Law Says

Introduction

Many of us like to keep a certain amount of cash at home – for emergencies, for convenience, or simply because cash gives a sense of security. 

But in India, with increasing scrutiny of cash transactions and the government’s push for transparency, you might wonder: Is there a legal limit to how much cash I can keep at home? And if there’s no fixed limit, what rules apply?

In this article we’ll break down:

• What the law says about holding cash at home in India

• Key related rules on cash transactions and reporting

• Practical tips to stay safe

• What happens if you cannot explain large cash holdings

• FAQs

By the end, you should have a clear, human-friendly understanding of the issue so you can plan accordingly.

 

What the Law Says: No Fixed Limit on Cash at Home

In simple terms: Under Indian law, there is no specified upper limit on how much cash an individual can keep at home, provided the cash is from a legitimate source and properly documented.

• Several reliable sources state: the Income Tax Act, 1961 does not lay down a maximum amount of cash a person may hold at home.

• For example, Financial Express reports: "Individuals are permitted to keep any amount of cash at home … as long as it is derived from legitimate sources and duly reported in their Income Tax Returns

• Another source puts it succinctly: “The amount of money you can keep at home is not restricted by law

Why: What do rules focus on instead?

While there is no cap on how much cash you may physically hold, the law emphasizes:

• The source of the cash must be genuine (income from business, salary, sale of asset, etc.)

• The cash must be accounted for in your books (if you are a business/professional) and declared in your income tax returns (ITR)

• If during an investigation large cash is found and you cannot satisfactorily explain its origin, the cash may be treated as unexplained income and taxed accordingly under provisions like Sections 68-69B of the Income Tax Act.

• Therefore, the stress is not on a numeric limit, but on documentation, transparency and explanation.

 

Key Related Rules You Should Know

Though you may hold any amount of cash at home, there are several transaction-related and reporting rules that you should be aware of. These rules often trigger scrutiny and affect how cash is accepted, paid or converted.

1. Section 269ST of the Income Tax Act – Cash receipts cap

This section prohibits a person from receiving cash of ₹2 lakh or more:

• From one person in a single day; or

• In a single transaction; or

• For one event or occasion.

• The penalty for contravention is 100% of the amount received i.e., you may have to pay a penalty equal to the amount of cash received.

• 2. Section 269SS of the Income Tax Act and Section 269T of the Income Tax Act – Cash deposits/loans

• Section 269SS prohibits the acceptance of a loan or deposit in cash above ₹20,000.

• Section 269T prohibits repayment of a loan/deposit in cash above ₹20,000.

• Violations can result in heavy penalties.

3. Expenses / purchases in cash – Section 40A(3) and cash-purchase limits

Even when holding cash at home is permitted, certain expenses or purchases done in cash may be disallowed for tax deduction purposes, or face restrictions. For example, payments in cash above ₹10,000 for certain business expenses may be disallowed.

4. Bank deposits, withdrawals and automatic reporting

While keeping cash at home may not be explicitly limited, large cash deposits or withdrawals into/from banks draw attention.

• Banks are required to report high-value transactions under Annual Information Return (AIR

• Though there isn't a rule stating you cannot deposit any amount, mismatches between your declared income and large deposit/withdrawal may trigger scrutiny.

• 5. Unexplained cash – Sections 68-69B

These sections empower tax authorities to treat cash (or other assets) as unexplained income if you cannot satisfactorily explain how the amount came about. Consequences include heavy taxation (often around 60% of amount plus surcharge and cess) plus penalties.

 

Practical Implications: What This Means for You

Since the law allows you to hold any amount of cash at home (in theory) but has many transaction and documentation restrictions, here how you should interpret it in practice.

It is legal to keep cash, but …

• You can physically keep ₹50,000, ₹5 lakh, ₹50 lakh, in cash at home… provided you can clearly show the source of this cash and that it is already taxed / declared.

• No statute automatically confiscates cash simply for being a large amount.

• But… a large unexplained cash holding can trigger an inquiry and possible penalties.

But you must document the source

• Suppose you have ₹10 lakh in cash at home. If you earned that as salary, you should have salary slips, bank statements, tax returns etc.

• Suppose you sold a property and kept ₹20 lakh cash . You should have sale deed, transfer proof, taxes paid etc.

• If you cannot explain how you came by the cash, the tax authorities may say “this is unexplained income” and tax it accordingly.

Transaction behavior matters

• If someone gives you cash of ₹3 lakh today for a transaction, you might violate Section 269ST (₹2 lakh cap). So being careful with receipts of cash matters.

• If you are a business and make large cash payments or deposits not matching your books, you may come under scrutiny.

• Even if you keep cash at home, when you later bank it or spend it, the transaction rules will matter.

 Holding cash at home – other risks

• Safety risk: theft, fire, natural calamity.

• Loss of opportunity: cash does not earn interest as bank deposits or other assets might.

• Inflation risk: cash loses value over time.

• Practical inconvenience: When you want to convert cash into bank funds, you may need to justify the source later.

 What triggers scrutiny

• Cash holdings in your home that are much larger than what your declared income suggests — mismatch triggers suspicion. 

• Frequent cash transactions beyond the ₹2 lakh cap in a single day from one person.

• Cash loans or cash deposits above ₹20,000 from or to others, where rules apply.

• Cash found during raids or assessments where books or returns don’t reflect it.

 How to stay compliant

• Always maintain books and records (especially if you run a business or professional practice) that show your “cash-in-hand” or similar.

• In your Income Tax Return, disclose your true income, declare assets and cash properly.

• For large cash holdings at home, be ready to show evidence of how you acquired it.

• Use digital transfers/bank transactions instead of cash wherever possible.

• If receiving or making large payments, use cheque, electronic transfer—avoid crossing the cash limits.

• Avoid accepting or giving large cash amounts from/to unknown persons, especially in a transaction.

• When you deposit large cash into your bank account, ensure it matches with your declared income or you have explanation.

 

Case Examples & What to Watch Out For

Example 1: A salaried employee

Mr. A earns a salary of ₹6 lakh per annum, pays tax, accordingly, banks his salary regularly. He withdraws cash over the years for convenience and has ₹4 lakh at home in cash. If asked by tax authorities, he shows his salary slips, bank statements, tax returns – he is quite safe.

Example 2: A businessman

Ms. B runs a small trading business. Her books show cash receipts and cash payments. She keeps ₹30 lakh in cash at home because she has cash sales and wants to retain flexibility.

She must ensure her books reflect that cash properly; otherwise, if she cannot justify that ₹30 lakh corresponds to her declared sales & profits, she is at risk of unexplained income.

Example 3: Huge unexplained cash found

Suppose Mr. C keeps ₹1 crore in cash at home but has declared income of only ₹2 lakh per year. If in a raid or survey this cash is found and he cannot show credible source, tax authorities may invoke Sections 68-69B and impose tax around 60% plus penalties.

Scenario: You receive ₹3 lakh cash for selling your old car

Under Section 269ST you cannot receive cash of ₹2 lakh or more from a single person in one day via one transaction (unless exempt). So here you may be violating the law of cash receipts; better to insist on cheque/bank transfer.

Scenario: You deposit ₹30 lakh cash into your bank

While depositing itself is not forbidden, your bank will report high-value transactions, and mismatch with your declared income may trigger scrutiny. Documentation will be required.

 

Why the Law Works This Way – Background & Purpose

Fighting “black money” & cash economy

India has long been combating unaccounted income, cash hoarding, and black money. Large amounts of cash make it hard to trace transactions, taxes and wealth. The restrictions (on cash payments, deposits, large transactions) are aimed at increasing transparency

Encouraging digital transactions

With advances in digital banking, UPI, online transfers, the government encourages lesser reliance on high-value cash transactions. Limits on cash receipts are one tool toward this.

Enforcing tax compliance

Large cash holdings can be a sign of undeclared income or tax evasion. Thus, rules are crafted to ensure people declare income, file ITRs, maintain records. The absence of a “cap” for holding cash at home perhaps recognizes the practical need for some liquidity, but the burden is on the citizen to show legitimacy.

 

Conclusion

To summarise clearly:

• There is no fixed legal limit on how much cash you can keep at home in India, under the Income Tax Act.

• What matters is source of the cash, such that it’s legitimately earned, properly declared and backed by documentation. Without that, large holdings may be treated as unexplained income.

• Holding lots of cash at home isn’t illegal—but it increases your risk if you cannot justify it.

• Even though holding is allowed, many transaction rules (cash receipts beyond ₹2 lakh, cash loans above ₹20,000, etc.) apply and you must comply with those.

• A best practice: keep your finances transparent, records up to date, use banking channels for large transactions, and if you keep cash at home, maintain evidence of how you came by it.

If I were to give a one-line advice: “You may keep as much cash as you like, **but be sure you can explain how you got it—and why you kept it—and that the rest of your financial life reflects it.””

 

Frequently Asked Questions (FAQ)

Q1. Can I legally hold ₹10 lakh in cash at my home?
Yes — provided the cash was legitimately earned, declared in your ITR, and you have supporting documentation for the source. The law does not set a specific cap on how much you may hold at home.

Q2. What if I can’t explain where the cash came from?
If you cannot furnish a credible source for the cash, then under Sections 68-69B the tax authority may treat it as “unexplained income” and impose tax (often ~60% plus surcharge and health/education cess) and other penalties.

Q3. Does the rule of ₹2 lakh cash receipts mean I can’t keep more than ₹2 lakh at home?
No — the ₹2 lakh limit under Section 269ST applies to receiving cash from a person in one day/one transaction/event, not to simply holding cash at home. The holding itself has no specified numeric cap.

Q4. If I have large cash at home, do I have to declare it in my ITR?
If you are a business or professional, your cash-in-hand should reflect in your books and ultimately your tax filings. For salaried individuals, if the cash represents past savings/proceeds that were taxed or declared earlier, you may not need to separately declare it, but you should be ready to explain it if asked. Many advisors suggest showing large cash holdings as part of assets if relevant

Q5. Are there thresholds for depositing or withdrawing cash from banks?
There’s no absolute legal limit for depositing cash in bank accounts, but banks report large transactions under Annual Information Returns (AIR). Also, withdrawals beyond certain amounts may attract cheque/PAN requirements. Large deposits with no matching income may trigger scrutiny.

Q6. If I keep large cash at home, what documentation should I maintain?
You should keep:

• Proof of the source of funds (salary slips, sale deeds, business profit, loan agreement etc.)
• Bank withdrawal slips if cash was withdrawn from your account
• Books of account (for business) reflecting cash receipts & payments
• ITRs showing income consistent with the cash holdings
• Any other supporting documents explaining why you keep cash (emergency fund, drawing from business etc.)

Q7. Is there any risk purely from keeping cash at home in large amounts (apart from tax scrutiny)?
Yes — risks include theft, fire, loss of value due to inflation, difficulty in converting into bank funds at short notice, and higher chance of being questioned by tax authorities.

Income Tax cash at home