What is the difference between SDL, T-bills, and G-secs?

SDLs (State Development Loans), T-Bills (Treasury Bills), and G-Secs (Government Securities) are government-issued debt instruments that serve different purposes. Since the Government of India backs these, these are also known as risk-free investments.

 T-Bills are short-term securities issued by the central government with maturities of less than one year, typically used for short-term borrowing needs, and are sold at a discount to their face value. There are three types of Treasury Bills (T-bills), distinguished by their maturity periods: 91 days, 182 days, and 364 days.

G-Secs, also issued by the central government, have longer maturities ranging from one year to 30 years and provide regular interest payments along with the return of principal at maturity, making them suitable for long-term funding.

In contrast to T-bills, SDLs are long-term loans issued by state governments and RBI coordinates the actual process of selling these securities. SDLs are generally used to finance developmental projects, and are similar in maturity to G-Secs. Overall, while all three are low-risk investments, they differ in terms of issuer, maturity, and specific funding purposes.