Haryana updates rules for issuing state Government Bonds

The revised framework lays out how the state will raise funds through government securities, who is eligible to invest and the mechanisms through which such bonds will be issued and serviced.

The Haryana government on Tuesday notified a revised framework governing the sale and issuance of state government securities, replacing guidelines that had been in place since 2007. Officials said the new rules are aimed at simplifying and modernising the state’s borrowing process.

Officials said the new rules are aimed at simplifying and modernising the state’s borrowing process.

The notification was issued by Anurag Rastogi, chief secretary to the Haryana government, who also holds charge of the finance department. The revised framework lays out how the state will raise funds through government securities, who is eligible to invest and the mechanisms through which such bonds will be issued and serviced.

Under the new rules, Haryana will issue bonds backed by the state’s Consolidated Fund, as permitted under the Constitution. The bonds may carry a fixed interest rate, to be determined through auctions or other approved methods. They may be issued at par, at a discount or at a premium and will have a minimum maturity period of one year.

Haryana’s outstanding debt is estimated at over ₹3 lakh crore, with market borrowings accounting for the bulk of the state’s liabilities, according to recent budget documents. Economists said the revised framework does not raise borrowing levels but could make issuances more predictable and market-aligned, potentially improving pricing over time. “Clearer rules and wider investor participation generally strengthen demand for state bonds, which can marginally lower borrowing costs,” said Vinod Bapna, chairman of Confederation of Indian Industry, Gurugram. Analysts, however, noted that borrowing costs will continue to be shaped largely by interest rate cycles and fiscal discipline.

The framework allows participation from a wide category of investors, including individuals, companies, institutions, provident and pension funds, trusts and other state governments. Non-resident investors will also be permitted to invest, subject to applicable foreign exchange regulations.

Key details such as the date of issuance, tenure and mode of sale will be notified by the Reserve Bank of India. The securities will be issued in digital form through RBI-managed accounts, a move officials said would improve transparency and security. Officials said no specific timeline has been announced so far for the first bond issue under the revised framework.

The minimum investment amount has been fixed at ₹10,000, with bonds to be issued in multiples of this amount. Interest payments and repayments of principal will be managed by the RBI’s public debt offices. The framework also provides for options such as early buyback, transfer of securities and consolidation of bond holdings. Officials clarified that the revised framework does not change Haryana’s borrowing limits or fiscal deficit targets, which will continue to be governed by the fiscal responsibility and budget management act and annual borrowing ceilings approved by the Union government.

According to the rules, the state may issue securities through auctions, direct sales or by exchanging existing bonds for new ones, in consultation with the RBI. Any disputes arising in connection with these securities will fall under the jurisdiction of Indian courts, the rules state.

Officials said the revised framework is expected to help the state raise funds more efficiently while providing greater clarity to investors.