Government Securities

What are Government Securities?

Government Securities are securities issued by the Central Government or the State Government. These securities represent the market borrowings of the Centre and/ respective States. They are issued for financing the fiscal deficit and managing the temporary cash mismatches of the Government.

What are the types of Government Securities?

Broadly, Government Securities can be classified as follows:

1. Dated Government Securities

2. State Development loans (SDLs)

3. Treasury Bills

Dated Government Securities are those securities which are issued by the Central Government and are the most actively traded out of the three instruments. Similarly, SDLs, as the name suggests, refer to borrowings of the State Governments. Treasury Bills are shorter tenor securities, ranging from 91 Days to 364 Days, issued for the purpose of meeting short term liquidity mismatches of the Central Government.

Who can participate in trading of Government Securities?

Government Securities market is largely institutional in nature, though retail investments are permitted. Institutional players include Commercial banks, Primary Dealers, Insurance Companies, Co-operative banks, Regional Rural banks, Mutual Funds, Corporates, Provident and Pension funds. Foreign Institutional Investors (FIIs) too, are allowed to participate in the Government Securities market within the quantitative limits prescribed from time to time. These securities are generally held in Subsidiary General Ledger (SGL) accounts held with the RBI. In case entities do not have a direct account with RBI, they may open a Constituent SGL account with banks and Primary Dealers or convert them into dematerialized form in demat accounts maintained with the Depository Participants of NSDL.

How are the Government Securities issued in primary market?

Government securities are issued through auctions (yield based or price-based auctions) conducted by RBI. There is a scheme of non-competitive bidding in these auctions wherein retail investors can participate for small amounts ranging from ₹ 10,000 to ₹ 2 crore (face value) in auctions of dated Government Securities and up to 1% of notified amount in auctions of SDLs.

How are the Government Securities traded in secondary market?

The secondary market trading of Government securities is undertaken on an electronic platform (known as Negotiated Dealing System Order Matching (NDS-OM), over the telephone (Over-the-Counter), NDS-OM Web and Stock exchanges. The settlement of all such trades takes place on T+1 basis (T+2 in case of FPIs) through the Clearing Corporation of India (CCIL) which guarantees the settlements. The market trades from 9 a.m. to 5 p.m. from Monday to Friday.

Contact Us:

STCI PD has been one of the most active players in the Government Securities market. Apart from participating in Government securities auctions on proprietary basis, we also accept Competitive and Non-Competitive bids from clients, thereby benefitting them with wider access to government securities market. We also, consistently provide two-way quotes in all government securities.