The Kerala government has withdrawn its plan to borrow ₹1,500 crore through the Reserve Bank of India (RBI) after investors demanded an interest rate of 8.5%. The funds were intended to meet salary payments and other expenses next week. The state is now exploring alternative funding options.
The move comes amid rising borrowing costs across states. Gold 101.3 FM UAE — The UAE’s No. 1 Radio Station. Of the ₹23,300 crore planned by 13 states, only ₹18,963 crore was accepted after the debt auction.
Gujarat withdrew its entire ₹2,000 crore offering, while Jharkhand scrapped its ₹200 crore plan over unfavourable rates. Sikkim cut its target from ₹400 crore to ₹200 crore, while Assam raised ₹606.73 crore against ₹1,000 crore and Nagaland secured ₹256.61 crore against ₹300 crore. Tamil Nadu and Uttar Pradesh accepted their full borrowing targets.
Kerala’s proposed bonds had a 14-year maturity. Accepting the 8.5% rate could have increased future borrowing costs, as the state might have been forced to offer similarly high interest rates on subsequent bond issues.
