COMPANIES need funds to run their business. One way they raise money is by issuing corporate bonds.

Similarly, the government also issues bonds to run its 'business', that is, to fund development projects, to fund the fiscal deficit and so on.

More on government bonds 

-- These bonds form the largest segment of the debt market.

-- Government bonds are of varying interest rates and tenures.

-- They are issued through an auction system.

Can I invest in these bonds?
Traditionally, the debt market has been an institutional market all over the world.

In India, banks, financial institutions, mutual funds, provident funds, insurance companies and corporates can invest in these bonds.

So, you can (indirectly) invest in a government bond by investing in, lets say, a mutual fund scheme that invests in it. For instance, gilt funds invest in government securities.

You can invest directly as well
Since January 2002, retail investors have been permitted to submit non-competitive bids at a primary auction through any bank or primary dealer.

You can submit bids of Rs 10,000 and multiples thereof. A single bid cannot exceed Rs 1 crore.

These bids, up to a maximum of 5 per cent of the notified amount, are accepted at weighted average price/ yield.

Read:Bond with the best

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Disclaimer: The contents of the article or are for information purpose only and are in no way meant to be advisory in nature. The author does not claim responsibility for actions taken by readers on the basis of the Article. Please consult your financial advisor for your personal money management.

e-mail: Team Wealth

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