Brokerage firm Zerodha has announced a significant expansion in its investment offerings through the Kite app. The platform now enables users to invest in primary issues of government securities such as Treasury Bills (T-Bills), Government of India dated bonds (G-Secs), and State Development Loans (SDLs), it said on platform X, formerly called Twitter.
"To invest, tap on Bids and then Government Securities," the Nithin Kamath-backed firm said.
This enhancement allows users to access a diverse range of securities issued by the
Reserve Bank of India (RBI) on behalf of the Indian government. These securities cater to varying investment horizons and risk appetites, offering distinct features and benefits.
Understanding government bonds
T-Bills: These short-term debt instruments are available in maturities of 91 days, 182 days, and 365 days. They are issued at a discount and redeemed at par value. For instance, an investment in a T-Bill at ₹98 and its redemption at ₹100 would yield a ₹2 return.
G-Secs: Issued with maturities ranging from 5 years to 40 years, G-Secs offer fixed interest rates paid every six months, with the principal repaid upon maturity. These securities provide a consistent income stream to investors.
State Development Loans (SDLs): Similar to G-Secs but issued by state governments, SDLs offer an alternative avenue for investment, supporting regional developmental initiatives.
Key considerations and features
Zerodha emphasises the flexibility of these securities, highlighting that there are no lock-ins. However, it's crucial to note that while G-Secs, SDLs, and T-Bills are listed on exchanges, liquidity might be limited presently for buying or selling. Potential investors are urged to be mindful of this aspect before committing funds.
Moreover, these bonds can be pledged and are deemed as cash equivalents, contributing to their versatility within investment portfolios.
