Types of Government Securities

Types of Government Securities

Here are the 10 types of government securities:

  • Treasury Bills (T-Bills)
  • Cash Management Bills (CMBs)
  • Dated Government Securities
  • State Development Loans (SDLs)
  • Sovereign Gold Bonds (SGBs)
  • Inflation-Indexed Bonds (IIBs)
  • Special Securities
  • Savings Bonds
  • Market Stabilization Scheme (MSS) Securities
  • Zero-Coupon Bonds

Contents:

Types of Government Securities

Government securities are debt instruments that the government sells to get money for different public projects. Because they are backed by the sovereign, they are seen as a safe way to invest. Here are all the 10 types elaborated:

  • Treasury Bills (T-Bills): Short-term securities with maturities of 91, 182, or 364 days, offering a safe avenue for parking short-term funds.
  • Cash Management Bills (CMBs): Very short-term instruments issued to meet the temporary mismatches in the cash flow of the government.
  • Dated Government Securities: Long-term securities with a fixed or floating interest rate issued with the purpose of raising capital.
  • State Development Loans (SDLs): Securities issued by state governments to meet their funding requirements, with a wide range of maturity periods.
  • Sovereign Gold Bonds (SGBs): Bonds that track the price of gold, providing an alternative to holding gold in physical form.
  • Inflation-Indexed Bonds (IIBs): Bonds that provide protection against inflation by linking returns to an inflation index.
  • Special Securities: Issued to specific institutions, like the Small Industries Development Bank of India, with special terms and conditions.
  • Savings Bonds: Non-tradeable securities aimed at individual investors, offering a fixed interest rate over a long-term period.
  • Market Stabilization Scheme (MSS) Securities: Issued to absorb excess liquidity from the system, aiding in inflation control.
  • Zero-Coupon Bonds: These bonds do not offer regular interest payments but are issued at a discount to their face value. On maturity, they are redeemed at face value.

Features Of Government Securities

The primary feature of government securities is their sovereign guarantee, making them a risk-free investment option. 

Here are seven other features:

  • Fixed Income: They provide a fixed income through interest payments, offering financial stability to investors.
  • Marketability: Most government securities are tradable in the secondary market, providing liquidity.
  • Variety of Options: The various types cater to different investment horizons and objectives.
  • Tax Benefits: Certain government securities like SGBs offer tax benefits.
  • Easy Accessibility: Accessible through banks, post offices, and even online platforms.
  • Transparent Trading: Trading is done on secure and transparent platforms, ensuring fair practices.
  • Eligible Collateral: They are accepted as collateral for borrowing from banks, enhancing their utility.

We hope that you are clear about the topic. But there is more to learn and explore when it comes to the stock market, commodity and hence we bring you the important topics and areas that you should know:

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Different Types Of Government Securities – Quick Summary

  • Government securities are debt instruments issued by the government, categorized into ten types, including Treasury Bills and Dated Government Securities, serving various investor needs and government funding requirements.
  • Government Bonds boast a sovereign guarantee, marking them as risk-free investments, coupled with features like fixed income, marketability, and eligibility as collateral, making them a diverse and secure investment avenue.
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Types of Government Securities – FAQs  

What are the different types of Government Securities?

  • Treasury Bills (T-Bills)
  • Cash Management Bills (CMBs)
  • Dated Government Securities
  • State Development Loans (SDLs)
  • Sovereign Gold Bonds (SGBs)
  • Inflation-Indexed Bonds (IIBs)
  • Special Securities
  • Savings Bonds
  • Market Stabilization Scheme (MSS) Securities
  • Zero-Coupon Bonds

What are the government securities in India?

  • Treasury Bills (T-Bills)
  • Cash Management Bills (CMBs)
  • Dated Government Securities
  • State Development Loans (SDLs)
  • Sovereign Gold Bonds (SGBs)
  • Inflation-Indexed Bonds (IIBs)
  • Special Securities
  • Savings Bonds
  • Market Stabilization Scheme (MSS) Securities
  • Zero-Coupon Bonds

Who gives government securities?

Government securities are issued by the central government or state governments in India. They are released through the Reserve Bank of India (RBI), which acts as the banker to the government.

Why are government securities important?

Government securities play a vital role in the financial market by providing a risk-free investment avenue, aiding government funding, and serving as a benchmark for pricing various financial instruments.

What are the 4 main types of Treasury bonds?

Treasury bonds are categorized into 4 types:

  • Treasury Bills: Mature in one year or less
  • Treasury Notes: Have maturities ranging from 2 to 10 years
  • Treasury Bonds: Mature in 20 or 30 years
  • Treasury Inflation-Protected Securities (TIPS): These are indexed to inflation and come in various maturity periods like 5, 10, and 30 years

To understand the topic and get more information, please read the related stock market articles below.

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