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State Development Loans (SDL), year by year — how India’s states borrow

Q: What is a State Development Loan (SDL)?

A State Development Loan (SDL) is a dated market borrowing — effectively a bond — issued by an Indian state government to fund its fiscal deficit. The Reserve Bank of India conducts the SDL auctions on the states' behalf as their debt manager. SDLs are SLR-eligible securities, so banks can count them toward the Statutory Liquidity Ratio, and they are repaid from the state's own revenues. They are the state-level counterpart to the central government's G-Secs.

Q: Why do SDLs yield more than central G-Secs?

SDLs typically trade at a spread of roughly 35 to 70 basis points over comparable-tenor central Government Securities. The spread reflects that SDLs are state obligations rather than the sovereign, are somewhat less liquid in the secondary market, and vary in supply across states. The spread widens when issuance is heavy or liquidity tightens and narrows when system liquidity is ample.

Q: Why do SDLs matter for banks?

Banks are major buyers of SDLs because the securities are SLR-eligible and offer a yield pick-up over central G-Secs for a similar risk profile. Heavy SDL supply adds to the overall stock of government paper banks must absorb, which can lift yields and move the mark-to-market on bank bond portfolios. SDL spreads and issuance are therefore part of the same government-borrowing backdrop as the fiscal deficit and G-Sec yields.

Quick answerState Development Loans (SDLs) are the dated market borrowings of India’s state governments, auctioned by the RBI on the states’ behalf. They are SLR-eligible and trade at a spread of about 35-70 bps over central G-Secs. Combined gross SDL issuance has climbed from roughly Rs 6.3 lakh crore in FY2019-20 to about Rs 11 lakh crore in FY2024-25, stepping up sharply in FY2023-24. SDLs are the state-level counterpart to the Centre’s borrowing behind the fiscal deficit and government debt. Figures are approximate and revised periodically.

The chart shows approximate gross SDL issuance (Rs lakh crore) by fiscal year; the table below carries the same figures plus the indicative spread over G-Secs, so the page is readable without JavaScript — for accessibility and AI answer engines.

Gross SDL issuance & spread over G-Secs

Fiscal year	Gross SDL (Rs lakh crore)	Spread over G-Sec	Note
FY2019-20	6.3	~65 bps	Pre-pandemic baseline
FY2020-21	8.0	~70 bps	COVID-19 — states borrowed more to fund relief & lost revenue
FY2021-22	7.0	~45 bps	Spreads narrowed as system liquidity stayed ample
FY2022-23	7.6	~40 bps	Issuance rose; spreads stayed compressed
FY2023-24	10.1	~35 bps	Record gross issuance; tight spreads over G-Secs
FY2024-25	11.0	~40 bps	Provisional — subject to revision

Figures are official estimates, rounded and approximate, drawn from RBI market-borrowing / State Finances data and the RBI Handbook of Statistics; later years are provisional and revised in subsequent vintages. The spread is an indicative range midpoint and varies by state, tenor and auction. For exact latest figures see the source linked below.

What it means for bankers

SDLs are the state-government leg of India’s public borrowing. Because they are SLR-eligible yet yield more than central G-Secs, banks hold large SDL portfolios for the pick-up in return. A heavier SDL calendar — gross issuance now near Rs 11 lakh crore a year — adds to the total supply of government paper the system must absorb alongside the Centre’s borrowing, which can lift yields and swing the mark-to-market on bank bond books. SDL spreads also signal demand for state paper and overall liquidity conditions: they narrow when liquidity is ample and widen when issuance is heavy. SDLs sit in the same borrowing picture as the fiscal deficit and government debt, against the backdrop of inflation and the repo rate.

Key terms in this dataPlain-English definitions of the terms behind this dashboard — see the full Indian banking glossary. SLR · Repo rate

More live dataExplore BankPulse’s other live RBI dashboards: G-Sec Yields · Government Debt-to-GDP · Fiscal Deficit · Liquidity Operations.

State Development Loans FAQ

What is a State Development Loan (SDL)?

An SDL is a dated market borrowing — effectively a bond — issued by an Indian state government to fund its fiscal deficit. The RBI conducts the SDL auctions on the states' behalf as their debt manager. SDLs are SLR-eligible (banks can count them toward the Statutory Liquidity Ratio) and are repaid from the state's revenues; they are the state-level counterpart to the central government's G-Secs.

How much do Indian states borrow through SDLs?

Gross SDL issuance by all states combined has grown to roughly Rs 11 lakh crore in FY2024-25, up from about Rs 6.3 lakh crore in FY2019-20, with a step-up to around Rs 10 lakh crore in FY2023-24. The exact figure varies with states' fiscal deficits and is revised periodically. Figures are approximate and rounded.

Why do SDLs yield more than central G-Secs?

SDLs typically trade about 35 to 70 basis points over comparable-tenor central G-Secs. The spread reflects that SDLs are state — not sovereign — obligations, are somewhat less liquid, and vary in supply across states. It widens when issuance is heavy or liquidity tightens and narrows when system liquidity is ample.

Why do SDLs matter for banks?

Banks are major buyers because SDLs are SLR-eligible and offer a yield pick-up over central G-Secs. Heavy SDL supply adds to the stock of government paper banks must absorb, which can lift yields and swing the mark-to-market on bank bond books — part of the same borrowing backdrop as the fiscal deficit and G-Sec yields.

Methodology & sources: see how BankPulse dashboards are sourced, verified & updated · machine-readable SDL JSON feed.

Last reviewed 19 Jun 2026 by Vikram Jain

Source: RBI market-borrowing / State Finances data and the RBI Handbook of Statistics on the Indian Economy, rbi.org.in. Figures are official estimates, rounded and approximate, revised periodically; later years are provisional. We never reproduce source text verbatim. Reviewed by Vikram Jain. Last updated 19 Jun 2026, 17:32 IST.