Government Securities (G-sec)

The Reserve Bank of India (RBI) recently maintained the investment limit by Foreign Portfolio Investors (FPI) in Government Securities (G-sec) unchanged and established the limit for Credit Default Swaps sold by FPIs.

About the G-sec:

• Government Securities (G-sec) are tradable instruments issued by the Central or State governments, representing the government’s debt obligation and auctioned by the RBI.
• There are two types of G-secs:
  • Short-term: Commonly known as treasury bills, with original maturities of less than 1 year (91 days, 182 days, and 364 days).
  • Long-term: Typically referred to as government bonds or dated securities with an original maturity of 1 year or more.
• The Central Government can issue both treasury bills and government bonds, whereas State Governments can only issue government bonds, known as State Development Loans (SDLs).
• G-secs are also referred to as “risk-free instruments” since they generally carry no risk of default.

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