Open market borrowings The normal procedure followed for open market borrowings, until the first half of the nineties, was that the RBI would complete the combined borrowings of all States in one or two tranches at a predetermined coupon, which was common to all States and was on par with that of the Central Government.
After announcement of the loan, the RBI would write to the banks indicating the contribution expected from them, mainly based on their market-share of deposits, with a request to invest in the State Government bonds.