**Executive Summary:**
This Reserve Bank of India (RBI) circular introduces Separate Trading of Registered Interest and Principal of Securities (STRIPS) in State Government Securities (SGS), effective from June 12, 2025. This is in addition to the stripping/reconstitution already permitted in Central Government dated securities. The circular outlines eligibility criteria for securities and procedures for market participants to request stripping/reconstitution.
**Key Points / Main Content:**
* **Introduction of STRIPS in SGS:**
* RBI introduces STRIPS in State Government Securities (SGS).
* This is in addition to existing stripping/reconstitution in Central Government securities.
* Related notification dated May 29, 2025, is enclosed.
* **Eligibility Criteria:**
* Eligible securities are fixed coupon securities issued by State Governments/Union Territories.
* Residual maturity up to 14 years.
* Minimum outstanding of ₹1,000 crore on the day of stripping.
* Securities must be eligible for Statutory Liquidity Ratio (SLR) requirements and be transferable.
* **Request Placement:**
* Market Participants with SGL accounts can place requests directly in RBI's e-Kuber system.
* Gilt Account Holders place requests with custodians, who then place requests in e-Kuber.
* **Nomenclature and ISIN:**
* ISIN and nomenclature for STRIPS in SGS will be similar to those for Central Government securities. (See Annex for examples)
* **Other Terms and Conditions:**
* RBI Notifications dated October 16, 2009, and April 10, 2018, apply to stripping/reconstitution in SGS.
* 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
* **Effective Date:**
* Stripping/reconstitution in SGS is effective from June 12, 2025
**Impact Analysis**
* **Market Participants:**
* *Impact:* Can now trade interest and principal components of SGS separately, potentially enhancing liquidity and portfolio management.
* *Action Required:* Place stripping/reconstitution requests through e-Kuber (for SGL account holders) or their respective custodians (for Gilt Account Holders). Ensure compliance with existing RBI notifications and guidelines.
* **Custodians:**
* *Impact:* Need to facilitate stripping/reconstitution requests from their Gilt Account Holders via e-Kuber.
* *Action Required:* Establish procedures for processing stripping/reconstitution requests and ensure timely submission to RBI via e-Kuber.
* **State Governments/Union Territories:**
* *Impact:* Their securities are now eligible for STRIPS, which could affect their yield and investor base.
* *Action Required:* No direct action required, but should be aware of the potential impact on their securities.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking system and monetary policy.
State Government Securities: Securities issued by state governments in India, formerly known as State Development Loans (SDLs).
STRIPS: Separate Trading of Registered Interest and Principal of Securities, a process of separating the principal and interest components of a bond.
Central Government dated securities: Fixed income securities issued by the Central Government of India.
Statutory Liquidity Ratio (SLR): The minimum percentage of deposits that a commercial bank has to maintain in the form of liquid assets.
eKuber: The Core Banking Solution system of the Reserve Bank of India, used for placing requests for stripping and reconstitution of securities.
Maharashtra: A state in India, used in the document as an example for the naming convention of STRIPS.
Rakesh Tripathy: Chief General Manager at Reserve Bank of India
बेटी बचाओ
बेटी पढ़ाओ
भारतीय �रज़व र् बकैं
RESERVE BANK OF INDIA
RBI/2025-26/54
IDMD.RD.S390/10.18.060/2025-26
June 12, 2025
All Market Participants
Madam/Sir,
Stripping/Reconstitution in State Government Securities
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.
1 State Development Loans are now known as State Government Securities.
आंत�रक ऋण प्रबंध िवभाग, केंद्रीय कायार्लय, केंद्रीय कायार्लय भवन, 23 वी ंमंिज़ल, शहीद भगत िसंह मागर्, मुंबई- 400 001, भारत
फोन: (022)-22610671; फै�: (022)-22644158; ई-मेल: cgmidmd@rbi.org.in
Internal Debt Management Department, Central Office, Central Office Building, 23rd Floor, Shahid Bhagat Singh Marg, Mumbai-400
001, India Tel: (022)-22610671; Fax: (022)-22644158, E-mail: cgmidmd@rbi.org.in
िहंदी आसान है, इसका प्रयोग बढ़ाइए(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.
Yours faithfully,
(Rakesh Tripathy)
Chief General Manager
Encl.: As aboveAnnex
ISIN for STRIPS
Structure:
I N M M Y Y
Issuer Month and Year of Subsequent
Country Security Checksum
type/State maturity of the Strips/Series
Code type Digit
Code STRIP serial number
Example of an SDL/SGS Pr incipal STRIP maturing in June 2035:
I N Y Y 0 6 3 5 P 0 1
Issuer Month and Year of Subsequent
Country Security Checksum
type/State maturity of the Strips/Series
Code type Digit
Code STRIP serial number
Example of an SDL/SGS Coupon STRIP maturing in June 2035:
I N Y Y 0 6 3 5 C 0 1
Issuer Month and Year of Subsequent
Country Security Checksum
type/State maturity of the Strips/Series
Code type Digit
Code STRIP serial number
YY: Two-digit distinct code assigned to individual State/Union Territory.
Nomenclature for Coupon STRIPS in SGS
STNAMESGSDDMONYYYYC; where STNAME = State/UT Name, SGS=State
Government Security, DDMONYYYY= date of maturity of the STRIPS and C=Coupon
STRIP (Illustratively, a coupon STRIP generated from, say, 7.85% MAHARASHTRA SGS
2035 maturing on June 20, 2035, would be written as MHSGS20JUN2035C)
Nomenclature for Principal STRIPS in SGS
x.xx% STNAMESGSDDMONYYYYP; where x.xx% is the coupon of the parent security
from which the principal STRIP has been generated, STNAME = State/UT Name,
SGS=State Government Security, DDMONYYYY=date of maturity of the STRIPS and
P=Principal STRIP (Illustratively, a principal STRIP generated from, say, 7.85%
MAHARASHTRA SGS 2035 maturing on June 20, 2035 will be written as
7.85%MHSGS20JUN2035P)