The Reserve Bank of India has introduced a facility for the Separate Trading of Registered Interest and Principal of Securities (STRIPS) for State Government Securities (SGS). This initiative, effective June 12, 2025, expands upon the existing STRIPS facility available for Central Government dated securities since 2010. The decision follows consultations with individual State Governments/Union Territories and feedback from market participants. Eligible SGS for stripping or reconstitution must have a residual maturity of up to 14 years, a minimum outstanding value of ₹1,000 crore as of the stripping date, be eligible for Statutory Liquidity Ratio (SLR) requirements, and be transferable. Market participants holding SGL accounts with the RBI can submit requests directly through the e-Kuber system, while Gilt Account Holders will process requests via their custodians. The ISIN and nomenclature for SGS STRIPS will align with those used for Central Government dated securities, and all relevant terms and conditions from previous RBI notifications and circulars will apply.
RESERVE BANK OF INDIA
RBI/2025-26/54
IDMD.RD.S390/10.18.060/2025-26 Dated: 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
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. Yours faithfully,
(Rakesh Tripathy)
Chief General Manager
Encl.: As above
Annex
ISIN for STRIPS
Structure:
| I N | M M Y Y | ||||
| Country Code | Issuer type/State Code | Month and Year of maturity of the STRIP |
Security type | Subsequent Strips/Series serial number | Checksum Digit |
Example of an SDL/SGS Principal STRIP maturing in June 2035:
| I | N | Y | Y | 0 | 6 | 3 | 5 | C | 0 | 1 | |
| Country Code | Issuer type/State Code | Month and Year of
maturity of the |
Security type | Subsequent Strips/Series serial number | Checksum Digit | ||||||
Example of an SDL/SGS Coupon STRIP maturing in June 2035:
| I | N | Y | Y | 0 | 6 | 3 | 5 | C | 0 | 1 | |
| Country Code | Issuer type/State Code | Month and Year of
maturity of the |
Security type | Subsequent Strips/Series serial number | Checksum Digit | ||||||
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)
Notes:
1 State Development Loans are now known as State Government Securities.
