Tuesday, June 11, 2013

Government Securities (G-Secs) Investment



Government Securities (G-Secs) are best proven and highly secured risk free investment tools for long-term investment in India. These G Securities can be issued by both Government of India and state governments. All Banks offering easy loans to the investors against these state and central government securities.

G-Secs are offers reasonable returns over the investment. Earning good returns profits on invested money is one of the vital reasons for investments in G-secs. In addition to returns on capital money, these government securities are highly trusted and secured borrowing instruments assigned by central and state governments.

Reserve Bank of India (RBI) is provides these borrowing instruments (G-secs) through action at regular intervals. These Govt securities have a maturity period of 1 to 30 years. These Secs are normally issued in dematerialized form (SGL) and in the form of Stock Certificates. The treasury bills are short term GOI Securities Do you know this? G-sec investments stand at Rs. 27,881bn in year 2011-12.

State government securities are issued in dematerialized form and in the form of Stock Certificates. The selling of State government securities (SDL), securities auction and allotment process is normally very similar to central government securities.

The best investment sources for traditional investors are saving banks, PFs, life insurance plans, recurring deposits and fixed deposits etc… whereas mutual fund schemes, pension funds, PPFs, term policies, gold investment plans etc. are attracted the investors towards diversified investment in order to secure the invested money and to achieve good returns with or without risk.

There are many advantages for investing in this G Sec (government securities).
  •     Risk free
  •     High yields for longer duration (up to 8.00 % to 8.30 %)
  •     Reasonable liquidity.
  •     Investment diversification option
  •     Secured ones
  •     Issued by trusted ones (Govt)
  •     Long-term investment time period

Indian debt market is broadly classified into two categories. Namely thy are,

1) Government Securities – EX: Central and State Government Securities...

2) Bond Market - EX: Corporate bonds and Debentures and Public Sector Units bonds...

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