BOND MARKET IN INDIA
BOND MARKET IN INDIA
BONDS ARE INTEREST BEARING DEBT INSTUMENTS. In India Bonds are issued by Government of India, State Governments, and Corporate Sector. The different categories of Bond market in India are as follows:
(a) Government and Agency Bond Market
(b) Corporate Bond Market
(c) Municipal Bond Market
(d) Mortgage backed and collateral Debt Market
(e) Funding Bond Market
(A) Government and Agency Bond Market:
A government Bond is a debt instrument issued by Government in the country’s own currency and is a tradable instrument with maturity period of one year or more. These bonds acknowledge the government debt obligation towards the holder .The government bonds can carry a fixed or floating coupon rate, which is paid at a periodicity on the Face value of the bond. Most of the government bonds are fixed coupon. The Public Debt office (PDO) of the Reserve Bank of India acts as the registry/depository of Government Bonds and deals with issue, interest payment and repayment of principal at maturity.
Different type of Government Bonds: (a) Fixed Rate Bonds: For these type of Bonds, the coupon rate is fixed for the entire life of Bond at a particular percentage of Face Value.(b) Floating Rate Bonds: For these type of Bonds, Coupon rate is not fixed. The coupon rate is variable and is reset at a pre- announced interval. Floating rate Bonds were first issued in September 1995 in India. (c) Zero Coupon Bonds: These types of Bonds are Bonds with no coupon payments. These Bonds are issued at a discount to the Face value. These Bonds were issued by Government of India in nineties and after that it has not issued these types of Bonds.(d) Capital Indexed Bonds: To protect the holders from the inflation, in this type of Bonds the principal is linked to an accepted Index of inflation. In December 1997, a Capital Index Bonds, with the principal hedged against inflation with maturity of 5 years was issued.
Salient features of Government Bonds: (A) No risk
BONDS ARE INTEREST BEARING DEBT INSTUMENTS. In India Bonds are issued by Government of India, State Governments, and Corporate Sector. The different categories of Bond market in India are as follows:
(a) Government and Agency Bond Market
(b) Corporate Bond Market
(c) Municipal Bond Market
(d) Mortgage backed and collateral Debt Market
(e) Funding Bond Market
(A) Government and Agency Bond Market:
A government Bond is a debt instrument issued by Government in the country’s own currency and is a tradable instrument with maturity period of one year or more. These bonds acknowledge the government debt obligation towards the holder .The government bonds can carry a fixed or floating coupon rate, which is paid at a periodicity on the Face value of the bond. Most of the government bonds are fixed coupon. The Public Debt office (PDO) of the Reserve Bank of India acts as the registry/depository of Government Bonds and deals with issue, interest payment and repayment of principal at maturity.
Different type of Government Bonds: (a) Fixed Rate Bonds: For these type of Bonds, the coupon rate is fixed for the entire life of Bond at a particular percentage of Face Value.(b) Floating Rate Bonds: For these type of Bonds, Coupon rate is not fixed. The coupon rate is variable and is reset at a pre- announced interval. Floating rate Bonds were first issued in September 1995 in India. (c) Zero Coupon Bonds: These types of Bonds are Bonds with no coupon payments. These Bonds are issued at a discount to the Face value. These Bonds were issued by Government of India in nineties and after that it has not issued these types of Bonds.(d) Capital Indexed Bonds: To protect the holders from the inflation, in this type of Bonds the principal is linked to an accepted Index of inflation. In December 1997, a Capital Index Bonds, with the principal hedged against inflation with maturity of 5 years was issued.
Salient features of Government Bonds: (A) No risk
References: a. www.sebi.gov.in b. www.rbi.org.in c. IOSR-JBM, ISSN: 2278-478, ISSUE 4(SEPT OCT 2012), PP;46-50