Government Security is a tradable instrument issued by the Central Government or the State Governments. The main feature of G-secs is the fixed interest income to the investors and carries practically no credit risk, which is why there is a visible trend of investors’ affinity for debt funds at a time when the equity markets remained weak and volatile. In India, types of government securities issued by the CG and SG are treasury bills, dated securities and bonds.
Main customers for the G-secs are the wholesale players like the Banks, Financial Institutions, FIIs etc. Now the Government has been trying to diversify the market for these securities to the retail investors, which led to various amendments in the Government Securities Act, 2006 and the regulations thereto to make it more retail investor friendly.
To enable medium and small investors to participate in the auction process without taking the price risk in auctions, the RBI has introduced a facility of non-competitive bidding in dated government securities auctions for select set of investors. Non-competitive bidding means that a person would be able to participate in the auctions of dated government securities without having to quote the yield or price in the bid. Thus, he will not have to worry about whether his bid will be on or off-the-mark; as long as he bids in accordance with the scheme, he will be allotted securities fully or partially.
One of the important things that investors should note that the G-Secs can be online traded. The investment is as simple as in the equity market. It has the similar requirements like demat account, initial investment of Rs. 10,000 and accessibility to invest. IDBI Samridhi G-Sec is an online portal to invest in it. You have to fulfill all the pre-requirements before investing like a demat account, bank account, online account with IDBI. There are a large number for G-Secs available to investments including short tenure and long tenure even upto 30 years. The transactions can be done from 9 a.m. to 2 p.m on any working business day.
So, with the best possible flexibility and a very safe investment retail investors can easily go for this new option without any problem.