Tradable debt instruments issued by the central or state governments to borrow money, backed by the sovereign and therefore treated as risk-free; the RBI manages their issue as the government's debt manager.
- Dated G-secs are long-term securities (maturities of 5 to 40 years) carrying a fixed or floating coupon; Treasury Bills are the short-term (up to one year) form issued at a discount.
- State governments issue State Development Loans (SDLs); the RBI conducts the auctions and maintains the accounts as the government's banker and debt manager.
- G-secs qualify as Statutory Liquidity Ratio assets, so banks hold large amounts to meet the SLR; they are also the collateral used in repo and open market operations.
- The yield on the 10-year G-sec is a key benchmark interest rate; the Retail Direct scheme lets individuals buy G-secs directly from the RBI.
- Sovereign Gold Bonds and inflation-indexed bonds are special government issues.
G-secs link the concept fiscal deficit (financed by borrowing), the SLR and the RBI's liquidity operations, so they recur across money, banking and budget questions.
Government securities (sovereign debt, risk-free) versus corporate bonds (carry credit risk); the RBI issues G-secs as the government's agent, it does not own them.
Sovereign debt instruments (dated G-secs and T-bills) issued via the RBI; risk-free, count as SLR assets, used in repo and OMO.