Government Bonds: RBI Buyback and Types of G-Secs
Why in the news
RBI completed its second bond buyback auction of FY26, adding liquidity while handling debt maturities. Banks may be shedding near-term papers from Held-to-Maturity (HTM) books to lock in better yields.
About government bonds
- Debt instruments of the Centre and States, used for infrastructure or liquidity needs; they promise coupon and principal.
- Part of G-Secs; tenures of 5-40 years; coupon fixed or floating, paid semi-annually.
- Once for big institutions; now retail investors, co-operative banks and individuals can buy.
Types
| Type | Main points |
|---|---|
| Fixed-rate | Constant coupon, e.g. ‘7% GOI 2021’ |
| Floating rate | Resets at intervals such as 6 months; base rate plus auction-set spread in some |
| Sovereign Gold Bond | Gold-linked; 2.50% tax-free; 5-year redemption; limit 4 kg a year (individuals, HUFs), 20 kg (trusts) |
| Inflation-indexed | Linked to CPI or WPI; capital indexed bonds adjust principal only |
| 7.75% GOI Savings Bond | Replaced 8% bond in 2018; taxable; minimum ₹1,000 |
| Call or put option | Buyback or sale back after 5 years at face value |
| Zero-coupon | No interest; discounted issue, face-value redemption; not auctioned |