BHUBANESWAR: The State Government will raise a loan of `500 crore from the open market through sale of government securities of 10 years tenure to meet some of its committed expenditure.
“The proceeds of the loan will be utilised for financing development programmes and projects to be implemented in the State. Permission of the Central Government has been obtained for raising the loan,” sources in the Finance Department said.
The Government stock will be sold through auction by the Reserve Bank of India (RBI), Mumbai on November 28. Bids for the auction are to be submitted in electronic format to RBI’s core banking solution (CBS) system, E-Kuber, on the same day between 10.30 am and 12 pm, said a notification of the Finance Department.
The RBI would display the auction results on the same day, while successful bidder has to make payment on November 15 before closing of banking hours. The 10-year tenure borrowing of the stock will commence from November 29, 2017 and the loan will be repaid on November 29, 2027. The cut off yield determined at the auction will be coupon rate per cent per annum and the interest on the loan will be paid on May 29 and November 29 of every year till the end of the tenure.
The investment on government stock will be reckoned as an eligible investment in government securities by banks for the purpose of statutory liquidity ratio (SLR) under Banking Regulation Act, 1949 and the stocks will qualify for ready forward facility.
This is the sixth time the State Government has gone for market borrowing in the current financial year. With this fresh borrowing, the total market borrowing of the State will be `5,000 crore, the sources said.
During the monsoon session of the Assembly, Finance Minister Shashi Bhusan Behera had said the Government had planned to raise `17,803 crore loan from the open market in the current fiscal to meets it expenses. With the Government planning to pay back `3,414 crore, there will be net loan of `14,388 crore.