Bonds and the Bond Market in India
Government Securities and T-Bills
The central government borrows through treasury bills of up to one year and dated government securities of longer maturity, issued by the RBI on its behalf.
The backbone of India’s bond market.
T-bills
Short-term borrowing with maturities of 91, 182 and 364 days, sold at a discount.
Dated securities
Longer bonds, up to 40 years, that pay coupons twice a year.
State loans
States issue State Development Loans, priced slightly higher than central bonds.
Auctions
The RBI conducts regular auctions where banks, insurers and funds bid.
A weekly auction
The RBI sells bonds each week, and bids decide the yield.
Confusing T-bills and bonds
T-bills are short-term discount instruments.
Key takeaways
- T-bills are short term.
- Dated securities pay coupons.
- States issue SDLs.
- Auctions set yields.
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