Dated G-Secs are securities issued for a tenor ranging from 5 years to 40 years. These borrowings form the crux of the Central Government’s borrowing programme aimed at financing the shortfalls in fiscal balances. Since these are sovereign issuances, they practically carry no risk and hence, are also referred to as risk-free gilt-edged instruments.
G-Secs carry a coupon rate which is paid half-yearly and are redeemed at maturity at par value on maturity date. They qualify as SLR instruments and can also be placed as collaterals for market repo borrowing as well as borrowing under RBI’s Liquidity Adjustment Facility (LAF). Most of the securities can also be placed as collaterals for CBLO borrowing and Securities Guarantee Fund (SGF). The minimum amount in which they can be traded is Rs 10,000.
The G-Secs issuances are managed by the RBI, who on behalf of the Centre, regularly conducts G-Sec auctions every Friday. The total auction size generally ranges between Rs 15,000 – Rs 18,000 Cr. Considering such large issuance size, they are underwritten by Primary Dealers. In the primary market, G-Secs are auctioned on an electronic platform, called the E-Kuber, the Core Banking Solution (CBS) platform of RBI. Commercial banks, Scheduled UCBs, Primary Dealers, Insurance Companies and Provident Funds, who maintain funds and securities account with RBI, are members of this electronic platform. In addition, with a view to provide retail participation, a separate scheme of Non-Competitive Bidding was introduced in 2002. In every G-Sec auction, a maximum of upto 5% of the notified amount is reserved for non-competitive bids. The size of such bids can range from Rs 10,000 – Rs 2 Cr for dated G-Secs.
Dated G-Secs have a very liquid and vibrant secondary market. They can be traded on NDS-OM, Over-the-counter, NDS-OM Web and Stock exchanges. Short selling too, subject to certain restrictions, is permitted.
STCI PD has been one of the most active players in the debt market. Our key functional areas of operation involve underwriting the Government of India bond auctions and aiding in efficient price discovery in Primary and Secondary market. Apart from participating in SDL auctions on proprietory basis, we also accept Competitive and Non-Competitive bids from clients, thereby benefitting them with wider access to debt market. We also, consistently provide two way quotes in all debt securities.
Clients interested in placing bids in Primary auctions and/or buying/selling Dated G-Sec securities may contact our Sales Personnel on 022-66202224/25/28. We endeavor to provide the best possible returns to our clients, keeping in line with their overall investment objectives.
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