Recently, while making major structural changes, RBI has given this facility that now retail investors can directly transact in government bonds. India has now joined the list of countries where common investors deal in government bonds.
Government Bond: Recently, while making major structural changes, RBI has given this facility that now retail investors can directly transact in government bonds. Common investors can do transactions in both the primary and secondary markets through the Reserve Bank of India. With this decision, India has now joined the list of countries where common investors transact in government bonds. Since this decision, the discussion about the government bond has increased. Experts believe that at present, government bonds can become a safe option for investment, yes the risk is low and the returns are stable. With the aggressive purchase of bonds by the RBI, the bond market is expected to rise further.
GSAP 2.0: Bonds to be bought worth Rs 1.2 lakh crore
On June 4, while announcing the credit policy, RBI said that under GSAP 1.0, additional government securities (G-sec) of 40 thousand crores will be purchased this month. In the second quarter, under GSAP 2.0, government securities worth 1.2 lakh crore will be purchased through the open market. It is believed that the purchase of government bonds will give a boost to the bond market and will help in reducing the bond yield. Prior to this, the first phase of GSAP got a great response from the market.
What is Government Bond?
A government bond is a debt instrument, which is traded. These are issued by the central and state governments. The government sometimes needs funds. In such a situation, such bonds are issued to raise money from the market. If the security is issued for a period of more than one year, then it is called a government bond. These bonds are issued even in case of liquidity crisis. There is an inverse relationship between bond yield and bond price. RBI will buy government bonds worth 35000 crores, 10 big announcements of Central Bank in the war with Corona
Which investors should invest
Government bonds are a good option for those investors who avoid taking market risk. Safe options include FDs, RDs, tax free bonds as well as Government Securities (G-sec). Since they are issued by the government, these are considered safe options. Interest rates are currently at lower levels. In such a situation, it can be a better option for investment right now. If you look at the returns of the last 5 years here, there are many government bonds that have given better returns than FDs. IDFC Government Securities Constant Maturity, ABSL Government Securities, DSP Government Securities and LIC MF Government Securities PF have had returns of 8 to 10 per cent in the last 5 years.
how to invest in government bonds
Investing in it can be done with the help of brokerage platform. One can also invest in government bonds indirectly through mutual funds. Because debt funds invest their money in this. If you invest in G-Sec and hold the investment for more than three years, then you can avail income tax benefits by investing through mutual funds.
