RBI Monetary Policy: RBI Governor Shaktikanta Das told in a press conference after reviewing the Monetary Policy that the government is preparing for major reforms regarding securities.
Reserve Bank Governor Shaktikanta Das told in a press conference that retail investors in government bonds will be able to invest money directly through RBI. RBI is going to bring guidelines for this soon. A new platform will also be made for this. Let us tell you that government bonds are also one among all options of investment. Government bonds are considered very safe for investment. There is a government guarantee behind this. There is a fixed interest on these bonds.
What are government bonds
If the government needs money for some work, then it issues a bond. This bond is also called a letter of credit and it is like a loan.
Money collected from government bonds is put into government schemes and the responsibility of this money is entirely the responsibility of the government. Therefore, government bonds are considered very safe. Buying government bonds is seen as a long-term investment.
Earlier only big investors were able to invest in them. However, now even small investors are allowed to invest in them. The maturity period of such bonds is one to 30 years.
Fixed coupon bonds are the most common government securities that it issues. These have a fixed rate of interest. Interest is paid every half year. Government bond interest rates on borrowings depend on the market. These are decided through the auction process.
Interest rates on government bonds are the lowest in that period. The reason is that they are considered to be free from credit risk. Other bonds of the same period have higher rates of interest than these.
The bond yield and its values are inversely related. That is, bond prices decrease as the yield increases. Similarly, the value of the bond increases as the yield decreases. Bond yield is the return on a bond.
Usually 9 types of bonds are issued. 1. Sovereign or Government Bond, 2. Municipal Bonds 3. Corporate Bonds 4. Secure Bond 5. Insecure Bond 6. Zero Coupon Bond (Zero) Coupon Bond). 7 Preparatory Bond 8. Inflation Bond 9. Convertible Bond
Now you can open an account with RBI
The Reserve Bank of India will soon allow retail investors to open gilt or G-Sec accounts with the Central Bank, a move that will take the bond markets in India to new heights.
RBI says that soon common investors will also be able to open an account with RBI. Guidelines will be issued soon for this. The RBI chief said that India will join a handful of countries where retail investors have direct access to government bonds.
The name of this new platform will be Retail Direct.
People invest the most money in tax free bonds
Tax-free bonds have the highest demand in the market. These bonds are issued by government companies. Interest on these bonds is exempt from income tax.
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