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Government bonds are backed by sovereign guarantee and thus, are one of the safest investment options in India. If you are looking for stable returns, capital protection and predictable income at lower risk, government bonds can be a smart addition to your investment portfolio. There are various direct and indirect ways through which individuals can invest in bonds, including RBI Retail Direct, Stock Exchanges, authorised online bond platform providers, etc. To know more on how to invest in government bonds, read below.
Retail investors can invest in government bonds in different ways directly and indirectly. Some of them have been discussed as below:
Retail investors can invest in government securities directly through auctions conducted by the RBI. The minimum investment amount needed to invest through these auctions is Rs 10,000. Moreover, to encourage retail investment, the RBI has allocated a separate quota for individual investors in each bond auction.
The RBI Retail Direct platform is a dedicated online portal that allows individual investors to invest directly in government securities without any intermediaries. Here, prospective investors will need to open a Retail Direct Gilt (RDG) account, enabling direct participation in primary auctions as well as secondary markets.
Retail investors can invest in government securities through stock exchanges, i.e., NSE and BSE. These stock exchanges offer their respective platforms (NSE goBID & BSE Direct) where individual investors can participate in the non-competitive bidding facility. Here, investors are allowed only a single bid per security in an auction for a minimum amount of Rs. 10,000 (and in multiple of Rs. 10,000 thereof) and the payment for the security can be done through the notified bank account linked to the demat account or through UPI.
Investors can buy government bonds directly by opening a gilt account with scheduled banks or the RBI. These accounts allow individuals to hold and transact in government securities securely, making them suitable for investors looking for direct exposure without intermediaries.
Online bond platforms allow investors to compare, buy, and sell government bonds digitally in a convenient and transparent manner. These platforms provide easy access to both primary and secondary bond markets, making bond investing simpler for retail investors.
Government bonds can also be purchased through authorised dealers like notified banks as well as post offices. Investors have to submit the application form for the purchase of their target G-Secs by providing details like the demat account number and other KYC details like the Aadhaar card, PAN Card, and voter card among others. This makes investment in government bonds further accessible to a broad category of investors who may not have access to stock brokers or other dynamic investment portals.
One of the most common ways to invest in government securities also known as G-Secs is through your stock broker. Just like investing in any other stock, investors can invest in their target G-Secs through the online portal provided by their stockbroker. It is important to note that similar to stocks, investors need to have a demat account to hold G-Secs as well. The advantage of buying G-Secs through your stockbroker is the knowledge of the investment process, pre-adherence to the KYC requirements as well as ease of managing all the investments under a single portal.
