9 Investment in Government Securities in 2023: RBI, along with NSE, has opened the way for investors to invest in government securities. Now investors can invest in government securities. A new investor should initially invest in government securities. Invest only because there is no risk in government securities and profit is definitely available in government securities. Initially, investors should invest without risk.
What are government securities?
India is the 5th largest economy in the world and the government needs money to accelerate economic development in the country. We include welfare schemes in economic development. To meet the goals of economic development, the government issues securities. Government securities are a type of certificate issued by the government.
The government promises the investors that after a certain time, after the maturity of the certificates purchased by the investors, it will return the money to the investors along with interest. The responsibility of selling the government securities lies with the Reserve Bank of India. Government Securities Central Government and State. The government can issue both. Government securities never lapse. In other words, government securities are also called bonds.
What are government securities and how many types are there?
There are 9 types of government securities:
9 Investment in Government Securities
The Treasury bill is also called the T bill. The government issues it for a short period of time, treasury bill helps in reducing the financial budget of the government. It has a maturity period of 3 months, 6 months, and 1 year.
Treasury bills are mostly taken by banks and financial institutions, no interest is given to them, and they are available on discount coupons, we can also tell this by an example.
Suppose a T.Bill whose face value is Rs 100 and it is given by the government on a discount coupon of Rs 90, its maturity period is 6 months, it is given to the investor, on completion of maturity, the investor gets [100 -90 = 10 RS. ] would benefit
Reserve Bank of India T.Bill Releases on Alternative Wednesday
Cash Management Bill [C.M.B ]
9 Investment in Government Securities The second part is the Cash Management Bill. The Cash Management Bill was first introduced by the Government of India in 2010. The Cash Management Bill was issued for a short-term period, in order to meet the temporary cash flow shortage of the government. It is used for cash management. The maturity period of the bill is three months, in this the investors are given less interest, and there is no risk in this also.
Dated Government securities [D. G .S ]
9 Investment in Government Securities, The third part is dated government securities. D G S has been issued for a long time. Their maturity period ranges from 5 years to 40 years. In this, interest is given to the investors. D G S is issued only by the Central Government. can implement, the state government cannot implement it
9 Investment in Government Securities, The fourth part is special securities, there are different types of special securities; Oil Marketing Company issues Oil Bonds, Food Corporation of India issues Food Bonds, and Fertilizer Company issues Fertilizer Bonds, investors are given bonds at higher coupon rate, special securities are issued for a long period.
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STRIPS [Separate Trading of Registered Interest &Principal of Securities]
9 Investment in Government Securities, The next section is STRIPS. STRIPS can be bought and sold only through a financial institution, broker, or dealer handling government securities. In STRIPS we assume that the principal and each interest payment are separate securities. Like [notes & bonds] they are created and can be snatched whereas bills and FRNs cannot be snatched, the government pays interest on S T R I P S, and the minimum amount for STRIPS is 100 $.
Sovereign Gold Bonds
Investors can invest in Government Securities, first of all, the popular Gold 999 was released by the Indian Bullion & Jeweler Association, investors can buy a minimum of 1 gram of gold and a maximum of 4kg of gold, Government on Sovereign Gold Bond 2.50% It gives 50% interest per year, and the maturity period of a Sovereign Gold Bond is 8 years, Sovereign Gold Bonds can be made tradeable, exchanged, and transferred by opening a demat account, in Sovereign Gold Bond the government does not give gold to the investors, but You will get a receipt for the purchase of gold, Government had launched Sovereign Gold Bond Scheme from 11-9-23 to 15-09-2023.