Reserve Bank Governor Shaktikant Das told a press conference that retail investors in government bonds would be able to withdraw money directly through the RBI. The RBI is going to bring guidelines for it soon. There will also be a new platform for it. Let us say that government bonds are also one of all investment options. Government bonds are considered very safe for investment. There is a government guarantee behind it. There is a fixed interest rate on these bonds.
What are government bonds
If the government needs money for any work, it issues a bond.
This bond is also called a loan certificate and is similar to a loan.
The money raised from government bonds is invested in government schemes and the responsibility for this money rests entirely with the government. So many government bonds are considered safe. Buying government bonds is seen as a long term investment.
Earlier, only big investors could invest in it. But even small investors are not allowed to invest in it. The maturity period of this type of bond is one to 30 years.
Fixed coupon bonds are the most common government securities it issues. It has a fixed interest rate. Interest is paid every six months. Interest rates on government bonds on borrowing are based on the market. It is determined by the auction process.
Interest rates on government bonds are the lowest in that period. The reason is that they are considered free from credit risk. The expected interest rate on the second bond of this period is higher.
Bond yields and their values are inversely related. That is, the price of a bond decreases as yields increase. In the same way, the value of the bond increases when the yield decreases. Bond yield is the return on a bond.
There are usually 9 types of bonds issued. 1. Sovereign or Government Bond, 2. Municipal Bonds 3. Corporate Bond 4. Secure Bond 5. Secure Bond 5. Insecure Bond 6. Zero Coupon Bond Coupon Bond). 7 Preparatory Bonds 8. Inflation Bonds 9. Convertible Bonds
Account can now be opened with RBI
The Reserve Bank of India will soon allow retail investors to open gilt or zee-sec accounts with the central bank, a move that will take bond markets in India to new heights.
The RBI says that soon even ordinary investors will be able to open accounts with the RBI. Guidelines for this will be issued soon. The RBI president said India has become one of the handful of countries where retail investors have direct access to government bonds. The name of this new platform will be Retail Direct
Tax-free bonds are in high demand in the market. These bonds are issued by government companies. Interest earned on these bonds is exempt from income tax.