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Date : May 11, 2000
Government Securities - Investment Opportunities for Provident Funds

Government Securities Market

Investment Opportunities for Provident Funds

Why G-secs?

Provident funds, by their very nature, need to invest in risk free securities that also provide them a reasonable return. Government securities, also called the gilt edged securities or G-secs, are not only free from default risk but also provide reasonable returns and, therefore, offer the most suitable investment opportunity to provident funds.

What are G-secs?

The Government securities comprise dated securities issued by the Government of India and state governments as also, treasury bills.

As an agent of the Government, the Reserve Bank of India manages and services these securities through its public debt offices located in various places.

Treasury Bills


Treasury bills (T-bills) offer short-term investment opportunities, generally up to one year. They are thus useful in managing short-term liquidity. At present, the Government of India issues four types of treasury bills, namely, 14-day, 91-day, 182-day and 364-day.


T-bills are available for a minimum amount of Rs.25,000 and in multiples of Rs. 25,000. T-bills are issued at a discount and are redeemed at par.


While 14-day and 91-day T-bills are auctioned every week on Fridays, 182-day and 364-day T-bills are auctioned every alternate week on Wednesdays. The Reserve Bank of India issues a calendar of T-bill auctions. It also announces the exact dates of auction, the amount to be auctioned and payment dates by issuing press releases prior to every auction.

Type of Day of Day of
T-bills Auction Payment*
14-day Friday Following Saturday
91-day Friday Following Saturday
182-day Wednesday of non-reporting week Following Thursday
364-day Wednesday of reporting week Following Thursday

* If the day of payment falls on a holiday, the payment is made on the day after the holiday.


Payment for purchase of 14 and 91-day T-bills by successful bidders has to be made on the Saturday following the Friday auction; and payment by successful bidders for 182-day and 364-day T-bills has to be made by successful bidders on the following Thursday. Payment by successful bidders at the auction are required to be made by cash/cheque drawn on the Reserve Bank of India or by Banker’s Pay Order.


Provident funds can participate in 14 and 91-day T-bill auctions as non-competitive bidders. Provident funds as yet are not allowed to purchase 182-day and 364-day T-bills as non-competitive bidders. Participation as non-competitive bidders would mean that provident funds need not quote the rate of yield at which they desire to buy these bills. The Reserve Bank allots bids to the non-competitive bidders at the weighted average yield arrived at on the basis of the yields quoted by accepted competitive bids at the auction. Allocations to non-competitive bidders are outside the amount notified for sale. In other words, provident funds do not face any uncertainty in purchasing the desired amount of T-bills from the auctions.

Where to purchase from?

T-bills auctions are held at the Reserve Bank of India, Mumbai. For this purpose the provident funds need to submit their bids to Mumbai office of the Reserve Bank in the prescribed form.

Those provident funds located outside Mumbai could send their bids well in advance either through fax (No. 022-2693332) or by mail to the Chief General Manager, Public Accounts Department, Reserve Bank of India, Fort, Mumbai – 400 001.

Dated Securities

Government paper with tenor beyond one year is known as dated security. At present, there are dated securities with a tenor up to 20 years in the market.


Dated securities are sold through auctions or through sale. Actually, the sale or auction in dated security would mean that the coupon for the security is either auctioned or is fixed. Fixed coupon securities are sometimes also sold on tap that is kept open for a few days.


Though there is no calendar for G-secs sale, the Government of India and the Reserve Bank issue a press release to announce the sale. The press release is widely reported in the print media and wire agencies. The government of India also issues an advertisement in the leading financial newspapers. The announcement of auctions/sales and their results are also published on the Reserve Bank website (URL:


Subscriptions can be for a minimum amount of Rs.10,000 and in multiples of Rs.10,000.

Where are the sales held?

Auctions and sales are normally conducted at the office of the Reserve Bank of India, Mumbai. Provident funds can submit their competitive bids/applications in the prescribed form available at the time of auction/sale of securities to the Chief General Manager, Public Debt Office, Reserve Bank of India, Fort, Mumbai 400 001 (Fax: 022-266 2721/022-266 0817).


In the case of auctions, the payment by successful bidders has to be made normally on the day following the auction day. In case of fixed coupon/tap sales, payment has to accompany the application form. The payment has to be made by cash/cheque drawn on the Reserve Bank of India or by Banker’s Pay order.

State Government Securities

These are securities issued by the state governments. The issues are also managed and serviced by the Reserve Bank of India.

The tenor of state government securities is normally ten years. State government securities are available for a minimum amount of Rs.1,000 and in multiples of Rs.1,000. These are available at a fixed coupon rate. Of late, however, some state governments have started auctioning their own securities. These securities could be purchased through a wide network of offices of both, the Reserve Bank of India and the State Bank of India and its associate banks.

Availability of G-secs

Apart from purchasing government securities from the Reserve Bank of India through its auctions/sales, all types of government paper can be purchased from the secondary market. Accredited Primary Dealers and Satellite Dealers also purchase and sell securities.

Even the Reserve Bank of India sells government securities through its open market operations window. The list of securities available from the Reserve Bank’s open market operations window is issued by the Reserve Bank of India from time to time and is well-publicised. Securities placed for sale on the Reserve Bank’s open market operations window can be purchased through its Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Kanpur, New Delhi, and Mumbai offices.

Reserve Bank of India
RBI on Internet :
Central Office

Shahid Bhagat Singh Road, Mumbai-400 001. Tel. 91-22-266 3540/0995, Fax 91-22-266 2105/265 9610
e-mail :