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State Development Loans offer a balance of safety and better returns compared to central government bonds. While they may not provide tax benefits or high liquidity, they are suitable for long-term investors seeking predictable income with low credit risk.
High returns
Earn fixed returns of up to 13.25%
Low investment
Start investing with as little as ₹1,000
Low risk
Invest in AAA–BBB rated bonds
No brokerage
0% brokerage or commission fees
High Yield
ICRA BBB
You Invest
₹9,949
Returns (YTM)
13.25%
You Get
₹11,493
Today
15 months
Invest in Tencent Backed, Digitally-Driven NBFC Managing an AUM of 1,700+ Cr
You Invest
₹9,949
Returns (YTM)
13.25%
You Get
₹11,493
Today
15 months
Invest in Tencent Backed, Digitally-Driven NBFC Managing an AUM of 1,700+ Cr
ICRA BBB
ACUITE BBB+
You Invest
₹9,800
Returns (YTM)
13.25%
You Get
₹12,680
Today
34 months
Listed NBFC, 670+ Cr AUM with 100% Secured Lending
You Invest
₹9,800
Returns (YTM)
13.25%
You Get
₹12,680
Today
34 months
Listed NBFC, 670+ Cr AUM with 100% Secured Lending
ACUITE BBB+
CARE BBB+
You Invest
₹1,01,274
Returns (YTM)
12.75%
You Get
₹1,17,652
Today
28 months
Listed NBFC backed by Kedaara Capital with 47% Capital Adequacy Ratio
You Invest
₹1,01,274
Returns (YTM)
12.75%
You Get
₹1,17,652
Today
28 months
Listed NBFC backed by Kedaara Capital with 47% Capital Adequacy Ratio
CARE BBB+
State Development Loans (SDLs) are debt instruments issued by State Governments in India to meet their borrowing requirements. These bonds are issued through the Reserve Bank of India (RBI) and are considered among the safest investment options after Government of India securities.
SDLs offer fixed interest income and have a predefined maturity, making them suitable for investors looking for stable and predictable returns.
Get up to 13.25% from bonds in 5 simple steps
Step 1: Login to your Paisabazaar account
Step 2: Select the Bonds
Step 3: Complete the KYC process
Step 4: Enter bank details
Step 5: Link your demat account
SDLs are issued by state governments via RBI auctions. Investors lend money to the state government for a fixed period and in return, investors receive regular interest (coupon) payments and principal at the maturity date.
Although SDLs are not backed by an explicit sovereign guarantee, they carry very low credit risk due to strong regulatory oversight and state backing.
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The interest rate on SDLs is generally higher than comparable G-Sec. This additional return, known as the spread, compensates investors for the slightly higher risk associated with state government borrowing.
SDL interest rates are determined through RBI auctions and vary based on market interest rates, the state’s fiscal position, tenure of the bond, etc.
The tax treatment of SDLs is similar to other taxable bonds:
Interest earned from SDLs is taxable as Income from Other Sources and taxed according to the investor’s income tax slab. Also, there is no special tax exemption available on SDL interest.
SDLs listed on stock exchanges can be sold in the secondary market before maturity. However, the liquidity may be lower than government securities. Also, its market prices may fluctuate based on interest rates. Therefore, only those investors should invest in SDLs who can hold it till its maturity date.
| Parameter | SDL | G-Sec |
|---|---|---|
| Issuer | State Governments | Central Government |
| Risk Level | Very Low | Backed by Sovereign Guarantee |
| Interest Rate | Slightly higher | Slightly lower |
| Liquidity | Moderate | High |
SDLs may be an ideal investment option for investors:
As compared to equities, SDLs carry lower risk. However, they are not risk-free. Some of the risks of buying State Development Loans include:
Retail investors can buy SDLs through these platforms:
Get up to 13.25% from bonds in 5 simple steps
Step 1: Login to your Paisabazaar account
Step 2: Select the Bonds
Step 3: Complete the KYC process
Step 4: Enter bank details
Step 5: Link your demat account
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