Mumbai: Eleven state governments raised ₹14,500 crore through state development loans (SDLs) on Tuesday, 38% lower than the initially indicated ₹23,300 crore, and 7.6% lower than the year-ago level of ₹15,700 crore, Icra said in a report.

Initially, 22 state governments and union territories (UT) had indicated that they would borrow ₹23,300 crore in the auction. Eleven of them, which had initially indicated that they would borrow ₹10,900 crore, did not participate in the auction.

Citing RBI data, Icra said that Punjab and Telangana borrowed ₹1,000 crore less in the auction than initially indicated for this week. In contrast, Andhra Pradesh, Gujarat and West Bengal undertook higher-than-indicated borrowings.

“Overall, SDL issuance has trailed the indicative level in seven of the 10 weekly auctions in Q2 FY22 so far. Cumulatively, 25 state governments and union territories (except Jharkhand, Karnataka, Odisha, Tripura and Puducherry) have borrowed ₹2.69 trillion SDLs so far in FY2022, 9.8% lower than the year-ago," it said.

In the latest auction, ₹8,700 crore or 60% of the total issuance was in the 10-year bucket, ₹3,700 crore or ~25% was in longer tenor issuances and the remaining ₹2,100 crore (~15%) was in shorter tenors. The weighted average cut off of 10-year SDLs declined by 5 basis points to 6.87% on 7 September from 6.92% last week.

“Notably, the usage of Ways and Means Advances (WMA) and Overdraft (OD) facilities by the states from the Reserve Bank of India (RBI) increased in Q1 FY22 from the year-ago level. This was led by a few states whose SDL issuance was also higher-than-indicated in that quarter, in contrast to the aggregate trend for the 28 states, indicating that liquidity tightness was limited to certain states during Q1 FY22," it added.