What are govt securities?

Reserve Bank of India (RBI) has given direct access of its government securities trading platform to small investors. With this, Retail investors can directly open their gilt accounts with RBI, and trade in government securities.

WHAT ARE GOVERNMENT SECURITIES (G-SEC)?
  • Tradeable instrument issued by the central government or state governments.
  • Dominated by institutional investors like banks, mutual funds, and insurance companies.
  • These entities trade in lot sizes of Rs 5 crore or more.

 

Factors which affect the prices of these securities
  1. Changes in interest rates in the economy and other macro-economic factors, such as, liquidity and inflation.
  2. Developments in other markets like money, foreign exchange, credit and capital markets.
  3. Developments in international bond markets, specifically the US Treasuries.
  4. Policy actions by RBI like repo rates, cash-reserve ratio and open-market operations.
  5. Demand and supply of the securities.