Telangana gets RBI nod for market loans, with riders | Hyderabad News

Currently, state govt stocks will bear interest at RBIdetermined auction rates.

HYDERABAD: After months of parleys with the Union finance ministry, Telangana secured permission from RBI for open market borrowings in the third month of this fiscal, reports Sribala Vadlapatla. The RBI gave the green signal to off-budget borrowings, but only for first two quarters and not exceeding Rs 20,000 crore.
Market loans: Telangana gets RBI nod with slim window
After months of hard-talk with the Union finance ministry, even citing amended FRBM rules, Telangana finally bagged regular permission from RBI for open market borrowings in the third month of this fiscal, albeit with a shrunken loan window.
The Union finance ministry gave the green signal to off-budget borrowings, but only for first two quarters, and not exceeding Rs 20,000 crore. Earlier this month, Telangana was granted ad hoc permission to raise Rs 4,000 crore from the market. “This corpus will be part of the total of Rs 20,000 crore, which the state can borrow in the first two quarters of this fiscal, giving time till September to raise the remaining Rs 16,000 crore,” a highly placed source told TOI.
On Friday, Telangana used this regular permission to keep a borrowing indent of Rs 1,000 crore for a 12-year repayment period at the apex bank. Andhra Pradesh, Assam, Gujarat, Haryana, Madhya Pradesh, Rajasthan, Tamil Nadu and West Bengal will participate in the auction early next week, where total borrowings of these states are pegged at Rs 19,000 crore.
The state government had proposed to borrow about Rs 53,000crore from the market in the 2022-23 fiscal. Sources said, the Union finance ministry may open a second window to allow borrowings of Rs 20,000 crore for the last two quarters, depending on Telangana’s income in these months.
Also, a ceiling of Rs 7000-10,000 crore may be clamped on the state, barring it from utilizing the entire loan proposed in the current window. “The state government has provided sufficient data on its debt burden to the Union finance ministry and the proposed reduction in loan window will be enforced in installments,” sources said.
Telangana raised Rs 43,784 crore from the open market in the auction conducted by the apex bank in the last fiscal. Currently, state government stocks will bear interest at RBI-determined auction rates.