Bonds and the Bond Market in India
Who Owns Government Bonds
Banks, insurers, provident funds and, increasingly, foreign investors hold most government bonds, partly due to regulatory requirements.
A captive market.
Banks
Banks must hold a share of deposits in government bonds under the statutory liquidity ratio.
Insurers and pension funds
They buy long bonds to match long-term liabilities.
Retail
RBI Retail Direct lets individuals buy government securities directly since 2021.
Foreign investors
Inclusion in global bond indices from 2024 opened the door to large foreign flows.
A retail purchase
An individual buys a government bond through the RBI's retail platform.
Assuming individuals dominate the market
Institutions hold most.
Key takeaways
- Banks hold bonds due to SLR.
- Insurers need long bonds.
- Retail Direct opened in 2021.
- Foreign flows rose after index inclusion.
No recording for this one yet - EconReader can read it aloud for you.