RBI auctions yield Rs 2K cr for Bengal

KOLKATA: The West Bengal government is on a borrowing spree as its resource stream from postal savings has dried up. The state has just mobilised Rs 2,000 crore using RBI’s auctions route. With the latest funds mop-up, it has borrowed a total Rs 5,128 crore this fiscal.

The state borrowed the sum by issuing an instrument, christened State Development Loans (SDL), through RBI’s auction window. According to market sources, institutional players like the SBI and Life Insurance Corporation (LIC) have invested heavily in West Bengal’s latest SDL issue.

Overall, the state’s borrowing programme received 128 institutional bids worth Rs 4,200 crore, more than double the SDL issue size. Something that confirms investor faith in the state’s repayment capacity. The funds were mobilised at an annual yield of 8.40% for 10 years.

The RBI conducted SDL auction in four states — Gujarat, Maharashtra, Rajasthan and West Bengal — on Monday. While Gujarat managed to garner Rs 1,000 crore, Maharashtra and Rajasthan raised Rs 722 crore and Rs 950 crore, respectively. West Bengal proved the largest borrower in Monday’s programme.

This is the fourth time that the state raised resources using RBI’s auction route this fiscal. Besides, the state has also re-activated the special purpose vehicle (SPV) route for resource mobilisation. This, according to senior state government officials, is due to the tepid funds flow from postal savings.