Stripping/Reconstitution in State Government Securities (SGS)
Stripping/Reconstitution in State Government Securities (SGS)
Please refer to paragraph No.1 of the Statement on Developmental and Regulatory Policies announced on August 07, 2019 on the proposal to introduce stripping/reconstitution facility for State Development Loans1 (SDLs), in consultation with the respective State Governments.
2. Based on consultation with the individual State Governments/Union Territories and the feedback received from market participants, it has been decided to introduce Separate Trading of Registered Interest and Principal of Securities (STRIPS) in State Government Securities (SGS). This will be in addition to stripping/reconstitution already permitted since April 1, 2010 in eligible Central Government dated securities. The related notification dated May 29, 2025, published in the Official Gazette, is enclosed.
3. Eligible securities
All fixed coupon securities issued by State Governments/Union Territories having a residual maturity of up to 14 years and minimum outstanding of ₹1,000 crore as on the day of stripping, provided that such securities are reckoned as eligible investment for the purpose of meeting Statutory Liquidity Ratio (SLR) requirements and are transferable.
4. Placing of Request
(a) Market Participants having an SGL account with the Reserve Bank can place requests directly in Reserve Bank of India Core Banking Solution (e-Kuber system) for stripping / reconstitution.
(b) Request for stripping / reconstitution by Gilt Account Holders shall be placed with their respective custodians maintaining the CSGL account with the Reserve Bank and the custodians, in turn, will place the request on behalf of their constituents in e-Kuber.
5. Nomenclature
ISIN and nomenclature for STRIPS in SGS, will be similar to STRIPS in Central Government dated securities. An illustration in this regard is given at Annex.
6. All other terms and conditions as set out in the RBI Notifications dated October 16, 2009 and April 10, 2018 shall apply, mutatis mutandis, to stripping/ reconstitution in SGS. Further, the guidelines on stripping /reconstitution of Government Securities as contained in our circular dated March 25, 2010 and any other circular referred to therein, as amended from time to time, shall also apply to stripping/ reconstitution in SGS.
7. The stripping/ reconstitution in SGS shall come into effect from the date of this circular.
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