Government bonds India - how to buy government bonds in India

Government bonds India - how to buy government bonds in India
These days, even small investors can also buy government bonds. In India, purchasing government bonds is easier than ever using a mobile app or a web based app of NSE (National Stock Exchange). The NSE app for buying government bonds is “NSE goBID“. NSE makes available to the users both a mobile app as well as a web based platform. When you buy government bonds via these apps, youa re buying them in the primary market.

What you can buy on these apps?

You can use these apps to buy the following kinds of bonds:

  • Long-term government bonds that you can hold for a long period from 5 to 40 years
  • Treasury bills (T-bills) which you can hold for less than 1 year
Here is how and why you must buy government bonds

To be able to buy these government bonds, you need to complete the registration on NSE goBID. The registration is a simple process that you can complete online.

Here are the other details you will have to know before buying the government bonds or T-bills.

Before November 2017, small investors or common people could never buy Government Securities (G-Secs) like bonds and T-bills. After the RBI commenced the “Non-competitive Bidding Facility“, G-secs became easily available for common people.

Bonds or T-bills are G-secs provided by government of India for the purpose of borrowing money from investors. While the big investors are entities like banks, insurance companies, mutual funds, trusts, and corporates, smaller investors will mean HNI’s, NRIs, HUF members, and individuals.

Earlier, the G-sec market was predominantly available only to big investors like banks, insurance companies and mutual funds. For small investors, it was a difficult process to invest in bonds. Also since the big players would deal with larger volumes, the small investors could not compete with them during the process of auctioning. The non-competitive bidding process announced by the RBI made it possible for the small investors and individuals to buy government bonds using the NSE goBID app with the minimum value of the bond being Rs.10,000. The investors will get the bonds at the weighted average rate and they need not worry about the auction.

You can think of investing in government bonds when you will not need the invested money oer a short time and if fixed income is your top priority. People seeking financial independence and retired persons usually prefer to invest in government bonds more than others. Government bonds assure security as well as generate a regular income. Another impetus for many people to invest in government bonds is that the interest generated from one type of government bonds is not liable to income tax. Those people who are in the maximum tax bracket will find this a highly profitable option.

Most kinds of government bonds are listed for trading on the stock exchange which is known as the secondary market. Once you buy these bonds, you can also sell them to interested buyers in course of time. However, it is advisable that you hold the government bonds for its full tenure (5, 10, 15, 20, or 30 years as is the case may be) to get the fullest benefits.