Government Securities Market in India: Banking Awareness Special Series

Team Adda247 and Bankers Adda have introduced a Special Banking Awareness series for SBI and IBPS Interviews 2021. In this series, we will be introducing the candidates with some banking awareness topics Daily that will improve their general awareness and will also ensure that the candidates do not lack in any banking term when it comes to the interview round. Today the topic of our Banking Awareness Series is Government Securities Market in India.

Government Securities Market in India

(Part-1)

The government securities market generally at the core of financial markets in most of the countries in the world. The government securities market deals with tradeable debt instruments which are issued by the government for meeting its financing requirements. The development of the primary segment of this market gives an advantage to the managers of public debt to raise resources from the market in a cost-effective manner with due recognition to associated risks. The secondary market helps in the effective operation of monetary policy through the application of indirect instruments such as OMO (Open Market Operations). 

The government securities market is generally considered the backbone of fixed income securities markets as it provides the benchmark yield and imparts liquidity to other financial markets. The existence of an efficient government securities market can be seen as an important precursor, in particular, for the development of the corporate debt market. As in most countries, the central bank of India (RBI) manages public debt and it plays an important role in developing the government securities market. Most of the time to change the environment of the economy wide-ranging reforms in the government securities market were largely undertaken. 

Government securities: G-sec is a debt instrument that is issued by a government and it can be issued by both central government as well as state government. Generally, risks associated with government securities are almost negligible and regular income can be obtained as interest. The main categories of Government securities are as follows: Treasury Bills (T-Bill), Cash Management Bills (CMBs), dated G-SECs, and State Development Loans (SDLs). 

In Part-2 we will discuss broadly these four categories of Government Securities.   

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