Press Information Bureau

Government of India

Ministry of Finance

29-November-2012 14:42 IST

As per the information received from the Reserve Bank of India (RBI), banks do not lend directly to the State Governments. The market borrowings of the State Governments are generally subscribed by commercial banks (including Nationalised banks).

It may be mentioned that there is no default in repayment of market borrowings of the State Governments so far.

This was stated by the Minister of State for Finance, Shri Namo Narain Meena in a written reply to a question in the Rajya Sabha today.

* * *
DSM/RS/ka

Market borrowings: state governments' obligations are typically held by commercial banks and have not defaulted in repayment. Market borrowings of State Governments are ordinarily financed through subscriptions by commercial banks, including nationalised banks, because banks do not advance loans directly to States, and there has been no default in repayment of these market borrowings.