RBI benchmark issuance plan to boost SDL liquidity

PTI

New Delhi

The RBI’s Benchmark Issuance Strategy for select states is expected to enhance transparency and liquidity in the State Development Loan (SDL) market, experts said.

 The central bank plans to implement the strategy on a pilot basis from FY27, wherein states will issue securities across predefined benchmark tenors aligned with a pre-announced borrowing calendar. This approach aims to create larger and more liquid benchmark bonds while improving price discovery and investor visibility.

 Market participants said the move will bring greater discipline and predictability to state borrowing programmes, benefiting both issuers and investors. Standardised issuances across key maturities such as 5-year, 10-year and 15-year tenors are expected to strengthen the SDL yield curve and improve secondary market liquidity.

 However, experts noted that the impact on yields and borrowing costs will be gradual due to continued heavy supply of state bonds.