Fintotal News Analysis | Now Buy Government Bonds Online
Now Buy Government Bonds Online
Ruby Jacob, 07 Feb 2012

Investing in government bonds has traditionally not been the common man's cup of tea. Government bonds or G-secs have been the playground of corporates, financial institutions and ultra HNIs. The wholesale market for G-secs is evergreen with some buzz happening all the time but it has been strange territory for retailers. Two reasons why retailers have kept their distance are low level of awareness and high costs of acquiring. The RBI has been urging banks to promote infrastructure for retail participation in government securities.

IDBI launched the first online retail portal for G-secs on 17 January 2012. Christened IDBI Samridhi Gsec Portal it makes transactions in government bonds accessible to individuals from the comfort of their homes. Now all you need to buy government bonds is a demat account and a bank account. Bonds of different maturities and coupon rates can be purchased subject to minimum investment of Rs 10, 000 and maximum of Rs 25 lakhs. The portal will be open for transaction from 9 am to 2 pm on business days.

Government bonds are issued by both central government and state governments. Returns on these are typically lower than those on many other securities available to investors. These are attractive to investors for whom security of capital invested is of prime importance.  There is no denying that G-secs offer unmatched safety as there is zero default risk.

Interest on these bonds is taxable although TDS does not apply. New comers in this arena should ideally buy bonds to hold them to maturity until they get a hang of what happens in the bond markets before they go on to ride on volatility and bond price movements.

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