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NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

Which statement about State Development Loans (SDLs) is correct?

State Development Loans are dated securities issued by state governments to raise market borrowings. They pay coupons and are tradable, unlike the description of central government issuance or non-transferable instruments held by RBI alone.

  1. AThey are dated securities issued by state governments to finance their borrowing needsCorrect
  2. BThey are issued by the Central Government to fund fiscal deficit only
  3. CThey are short-term discount instruments issued by municipal bodies
  4. DThey are non-transferable instruments held only by RBI

Explanation

SDLs are dated securities issued by state governments through auctions to meet their borrowing requirements. They are not issued by the Centre, and they are tradable, not restricted to RBI. They carry a coupon like dated G-Secs.

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