Stock Market · Currency, Commodity & GSec

G-Secs

Government Securities (G-Secs) are debt instruments issued by the central government of India to borrow money. They are considered the safest investment in the country. Backed by the full faith of the Indian government.

Types of G-Secs

• Treasury Bills (T-bills): short-term (91 days, 182 days, 364 days). Issued at discount, redeemed at face value.
• Government Bonds: medium to long-term (2 years to 40 years). Pay semi-annual coupon interest.
• State Development Loans (SDLs): issued by state governments, slightly higher yield than central G-Secs.

How yields work

A 10-year G-Sec with face value ₹100 and coupon 7% pays ₹7 per year.

If you buy it in the secondary market at ₹95 (discount), your yield is higher than 7%.

If you buy at ₹105, your yield is lower.

> Yield and price move in opposite directions. Rising yields = falling bond prices. This is critical to understand.

Why retail investors should care

• The 10-year G-Sec yield is the benchmark for all other interest rates in India.
• Home loan rates, corporate bond rates, and bank FD rates all reference the 10-year G-Sec.
• When 10-year yields rise, equity valuations come under pressure (higher discount rate).

Access for retail investors

• RBI Retail Direct: direct purchase from RBI without intermediary
• Gilt mutual funds: invest in G-Secs via fund manager
• Stock exchange: G-Secs trade on NSE/BSE in the secondary market

Takeaway. G-Secs are government bonds. The safest investment in India. Yield and price are inversely related. The 10-year G-Sec yield is the benchmark for all interest rates. Rising yields = expensive borrowing, pressure on equity valuations.