The State government has raised another tranche of ₹ 1,000 crore through open market borrowings (OMB) in the form of State Development Loan from the Reserve Bank of India on Tuesday.
The State had notified raising an amount of ₹ 750 crore as SDL, but had accepted another ₹ 250 crore as part of the auction. The State had accepted additional borrowing under the green shoe option and the loan carries cut off yield of 7 % with a tenure of 30 years.
Proceeds of the auction would be credited to the State’s account in a day and sources said provision of the green shoe option indicated the confidence of the investors in the State’s financial performance. The tenure of the loan at 30 years indicated that the State changed its earlier course of securing short term loans.
The State received appreciation from the Centre for its planning of short-term open market borrowings ranging from five to 10 years in the past but the system had changed since July last year since when the State had been opting for long tenure loans, alternating between 20 and 30 years.
The State had been continuously raising open market borrowings to meet the financial commitments since the last couple of months. In January for instance, the State borrowed ₹ 3,000 crore in three tranches of ₹ 1,000 crore each with tenures of 20, 30 and 20 years while it had raised another ₹ 1,000 crore on December 31, the last day of the third quarter, with a tenure of 30 years.
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