Government Securities (G-Secs): Types, Features and Issuers
About G-Secs
Governments borrow from the public through these instruments, seen as very safe investments.
Types
| Type | Maturity | Pay-off |
|---|---|---|
| Treasury Bills | Below 1 year (91, 182, 364 days) | Issued at a discount, redeemed at face value |
| Dated securities (bonds) | 5 to 40 years | Coupon, fixed or floating |
Features
- Safe: backed by the government.
- Liquid: tradable in the secondary market.
- Returns: depend on market rates and tenure; longer bonds may yield more.
- T-bills can reach retail investors via RBI or banks.
Issuers and purpose
- Centre issues through RBI; states issue State Development Loans (SDLs) via RBI auctions.
- Purpose: fund government spending and, through open market operations, steer money supply and monetary policy.
- Investors: banks, insurers, mutual funds, retail buyers.
Exam angle
- T-bill maturities: 91, 182, 364 days.
- SDL = state government securities.