RBI: Auction of state govt. securities Feb 20, 2026

RBI: Auction of state govt. securities Feb 20, 2026

RBI Announces Full Underwriting for ₹33,000 Crore State Government Securities Auction on February 20, 2026

The Reserve Bank of India (RBI) announced the results of the Additional Competitive Underwriting (ACU) auction for three state government securities (SGS) totaling ₹33,000 crore on February 20, 2026. The auction, which included securities with maturities ranging from 3 to 50 years, saw full underwriting, reflecting strong market confidence in state debt instruments.

The auction covered the following securities: 1. 6.03% GS 2029: Notified amount of ₹9,000 crore, fully underwritten at a cut-off commission rate of 0.30 paise per ₹100. 2. 6.68% GS 2033: ₹11,000 crore notified amount, fully subscribed with a cut-off rate of 0.60 paise per ₹100. 3. 7.24% GS 2055: ₹13,000 crore notified amount, fully underwritten at a higher cut-off rate of 1.88 paise per ₹100.

The results indicate robust participation from primary dealers, with the Minimum Underwriting Commitment (MUC) met for all securities. The ACU mechanism, which allows bidders to competitively underwrite government securities, was fully utilized, underscoring liquidity conditions and investor appetite for longer-duration instruments.

This auction follows a broader trend of strong demand for state debt in early 2026. For instance, state governments raised ₹476 billion in SGS in February, exceeding planned issuance by 11% in the largest auction of fiscal year 2026. However, the weighted average SGS cut-off yield rose to 7.63% on February 10, 2026, the highest since February 2024, reflecting tighter market conditions amid elevated government security (G-sec) yields.

The RBI's decision to conduct the auction aligns with its role in managing liquidity and ensuring smooth government borrowing. The main auction for these securities is scheduled for the same date, with proceeds expected to support state fiscal requirements. Market participants will closely monitor subsequent auctions for signs of sustained demand and yield stability.

According to RBI auction results and ICRA research, the market continues to show strong demand for state debt instruments.