Government Securities are issued by the Government for raising a public loan or as notified in the official Gazette. They consist of Government Promissory Notes, Bearer Bonds, Stocks or Bonds held in Bond Ledger Account. They may be in the form of Treasury Bills or Dated Government Securities.
Government Securities are mostly interest bearing dated securities issued by RBI on behalf of the Government of India. These securities are generally fixed maturity and fixed coupon securities carrying semi-annual coupon. Since the date of maturity is specified in the securities, these are known as dated Government Securities.
- Issued at face value
- No default risk as the securities carry sovereign guarantee.
- Ample liquidity as the investor can sell the security in the secondary market
- Interest payment on a half yearly basis on face value
- No tax deducted at source
- Can be held in Demat form.
- Rate of interest and tenor of the security is fixed at the time of issuance and is not subject to change (unless intrinsic to the security like FRB - Floating Rate Bonds).
- Redeemed at face value on maturity
- Maturity ranges from of 2-30 years.
- Securities qualify as SLR (Statutory Liquidity Ratio) investments (unless otherwise stated).
Currency trading can be very risky. Currencies tend to be very volatile compared to other markets. The real key to success with currency trading is to use conservative risk management. There are many components to effective currency risk management, but the bottom line is to use caution and have a trading plan.
Primary Market: The Primary Market consists of the issuers of the securities, such as, Central and State Government and buyers include Commercial Banks, Primary Dealers, Financial Institutions, Insurance Companies & Co-operative Banks. RBI also has a scheme of non-competitive bidding for small investors.
Secondary Market: The Secondary Market includes Commercial banks, Financial Institutions, Insurance Companies, Provident Funds, Trusts, Mutual Funds, Primary Dealers and Reserve Bank of India. Even Corporate and Individuals can invest in Government Securities. The eligibility criteria are specified in the relative Government notification.