The Indian government has planned to borrow $9.5 billion or about 500 billion rupees from public sector banks in the country, a move that will help reduce the need to increase sales of new bonds and also allow market to maintain its growth.

Acceding to reports, the government will use shares and land as collateral to raise the money from the banks. Data released by JPMorgan & Chase showed that rupee-denominated notes earned 2.7 percent in the month. Rupee debt earned 0.8 percent in Brazil, 1.1 percent in China and 0.06 percent in Russia while 10-year yields slid 34 basis points to 8.40 percent.

The sovereign bonds have recorded the highest growth this month after the RBI halted a series of increasing interest rates. Analysts believe that the government will have to revise its debt-sale target for a second time in the financial year due to eroding revenues.

The country will also establish a fund till id January, which use tap into government stakes in non-state companies and use it as collateral security for raisng debt. The fund will them use funds raised to buy the government's stakes in state-run firms. The more will improve federal revenue and allow finance ministry to reduce budget deficit. According to estimates, the government will be able to utilize 1 trillion rupees through this way and avoid the need for sales of shares in state-owned companies.

The government is planning to reduce revenue deficit to the level of 4.6 percent of gross domestic product by March 31 this year, according to budget estimates of the finance ministry.