In FY2026, 19 states used the SDF for 3,008 days, up from 16 states that availed funds under this window for 2,809 days in FY2025. The relative attractiveness of availing funds under the SDF window appears to have been supported by the higher spread between the weighted average cut-off yield of State Government Securities (SGS) and the SDF rate (Repo Rate minus 200 bps). 

 This spread increased to 436 bps in March 2026 from 289 bps in March 2025, marking the highest level since July 2022, when it had exceeded 500 bps. Additionally, incremental contributions by some states to the Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF) may have created greater room for utilising the SDF window in FY2026.