Invest in government bonds and sovereign gold bonds on Kite
An ideal portfolio should have a mix of multiple asset classes like equity, debt, and gold. Diversification helps you reduce risk and behave better.
Everybody knows how to get equity exposure, either through stocks or equity mutual funds. But when it comes to debt, most people don’t know all the available options.
If you want debt exposure in your portfolio, government bonds are the safest option. Treasury bills (T-bills), GOI dated bonds (G-Secs), and State development loans (SDLs) were available for investment on Coin, but we have now moved them all to Kite. Click here to invest.
Treasury bills (T-bills)
T-bills are short-term debt instruments issued in maturities of 91 days, 182 days, and 364 days. They are ideal for short-term needs. Treasury bills don’t pay any interest. They are issued at a discount and redeemed at par. For example, a 91-day Tbill can be issued at Rs. 98, but you will receive Rs 100 when it matures. The difference of Rs. 2 is your return.
GoI dated bonds (G-Secs)
G-Secs are long-term bonds issued by the government. They are the safest type of debt instrument and are guaranteed by the government of India.
- G-Secs are issued in maturities ranging from 5 years to 40 years.
- They pay a fixed interest rate that is paid out every 6 months and credited to your bank account. The principal is paid upon maturity of the bond.
- There are no lock-ins for these securities. All G-Secs, SDLs, and T-bills are listed on the exchanges, but liquidity is an issue. So, ideally you should invest if you intend to hold these bonds till maturity.
- These bonds can also be pledged and are considered as cash equivalents.
State development loans (SDLs)
SDLs have all the same features as G-Secs. While G-Secs are issued by the RBI on behalf of the central government, SDLs are issued by state governments. A common question investors ask is if SDLs have the same government guarantee. Shaktikanta Das, the RBI governor, clarified in 2019 that state development loans have an “implicit sovereign guarantee.”
How to understand government security symbols?
Treasury bills (T-bills)
For T-bills, you will see a symbol like “91 Day T-bill.” This is self-explanatory.
G-secs
RBI reissues existing bonds and also issues new bonds periodically.
For reissued G-Secs, you will see symbols like 7.18% GS 2037.
7.18% is the interest rate or coupon. This interest is paid out twice a year, and you will receive this in your bank account.
GS refers to government security
2037 is the maturity year.
If a government bond is being issued for the first time, you will see a symbol like “NEW GS 2033.” The yield is unknown when a government bond is issued for the first time. RBI conducts an auction to discover the yield, and once it’s discovered, the bond will then be allotted to you at that yield. The interest rate and yield will be the same for a new bond. So, in the case of a new bond:
NEW GS refers to a newly issued G-Sec
2033 is the maturity year.
State development loans (SDLs)
The symbols of SDLs are similar to G-Secs. For example, “6.81% PB 2031” or GA SDL 2031
6.81% is the interest rate or coupon. This interest is paid out twice a year, and you will receive this in your bank account.
PB refers to the state issuing the bond. In this example, it’s Punjab.
2031 is that maturity year.
If a state government bond is issued for the first time, you will see a symbol like “GA SDL2033.” The yield is unknown when a state government bond is issued for the first time. RBI conducts an auction to discover the yield, and once it’s discovered, the bond will then be allotted to you at that yield. The interest rate and yield will be the same for a new bond. So, in the case of a new bond:
GA is the state (Gujarat) that is issuing the bond.
SDL is short for state development loan.
2031 is the maturity year.
Sovereign gold bonds (SGBs)
If you want to diversify your portfolio with gold, sovereign gold bonds are one of the best options. SGBs are issued by the RBI on behalf of the government of India.
Advantages of gold bonds:
- Issued and guaranteed by the government of India.
- 2.5% interest per year over and above gold’s market returns.
- All gold bonds have a maturity of 8 years, with the option of premature redemption after 5 years. Gold bonds are also listed on the stock exchanges, and you can exit them anytime.
- No expenses or brokerage on investments through primary issues. There’s no brokerage on SGBs bought in the secondary market, but exchange and SEBI charges will be applicable.
- No capital gains tax on bonds purchased during issue and held until maturity. Interest is taxed at your slab rate.
- If bonds are sold within 3 years, STCG will be applicable, and above 3 years, LTCG will apply.
- Here’s a comparison of SGBs vs. physical gold, digital gold, and gold funds.
Note: It’s unclear if bonds purchased in the secondary market and held for more than 3 years are eligible for capital gains exemption. We are trying to get clarity on this.
Government bonds order window timings
| Security | Day | Time |
| Treasury bills (T-bills) | Monday to Tuesday | 6 PM on Tuesday. |
| State development loans (SDLs) | Opens and closes on Monday | 6 PM on Monday. |
| GoI dates bonds (G-Secs) | Tuesday to Thursday | 8 PM on Thursday. |
Note: The dates may change due to trading holidays.
Learn more about government bonds on Varsity. You can keep track of all upcoming issues of government bonds and sovereign gold bonds on TradingQnA:
Issuance calendar for T-Bills.
How to invest in government bonds and sovereign gold bonds?
To invest in government bonds or SGBs, follow these steps:
- Login to kite.zerodha.com.
- Click on Bids.
- Click on Govt. securities.
- Click on Place bid.
- Enter the amount.
- Click on Place bid.
Note: Government bonds and sovereign gold bonds are available on Kite web and will soon be available on Kite mobile.
Team Zerodha
India's largest retail brokerage
How to sell, what are the limits of minimum hold or there is lock in time?
Hi Ghanshyam, the G-Secs and SGBs are listed on the exchange. So you can sell them on the exchange just like stocks. However, on the exchange the liquidity is low. So, ideally you should invest if you intend to hold these bonds till maturity.
For SGBs, there is option of premature redemption after 5 years. You can check the process for this here.
If I buy through Zerodha, where can I see my investments in Govt bonds in Zerodha?
what will happen to SGB principal at MATURITY will it be deposited back in my zerodha account or i will be issued physical gold ??
Hi Neha, upon maturity the amount will be credited directly to your bank account. The redemption price is determined by the simple average of closing price of gold of 999 purity of previous 3 business days from the date of repayment. More here.
Hi Ravindra, once the bonds are credited to your demat account and listed on the exchnages, these will show in your holdings on Kite and Console.
Please give us the link to proceed further. And also expecting the answers to the questions asked, like minimum amount and minimum holding time and also how to sell?
Hi Shankar, you can invest in government bonds here. The minimum amount required in mentioned on the order window itself. There is no lock-in period. The G-Secs and SGBs are listed on the exchange. So you can sell them on the exchange just like stocks. However, on the exchange the liquidity is low. So, ideally you should invest if you intend to hold these bonds till maturity.
For SGBs, there is option of premature redemption after 5 years. You can check the process for this here
It will be better if you can share a video showing all the procedure.
if i buy through zaro. where i can see my investements/
Hi Ravi, once the bonds are credited to your demat account and listed on the exchnages, these will show in your holdings on Kite and Console.
What is the meaning of bid here and how it effects. Meaning the indicative yield shows 7.36% and the price is 105.35. Does it means the effective return value is 100 and the 5.35 is the premium of the bid and on maturity we get the price 107.36. Please clarify and elaborate. Also the maturity date is missing in the government bonds please indicate the date of maturity also on the portal.
Hi Nishant, 7.18% is the interest rate or coupon. This interest is paid out twice a year, and you will receive this in your bank account. The interest is paid on the face value, in this case, Rs. 100. 105.35 is the price of the bond, it is the estimated weighted average rate of all allotments to competitive bidders + accrued interest + markup value (difference between the lowest and highest bid). More here.
The maturity date of the bond is shown on the order window itself along with indicative yield and price.
When will we receive the Interest? How do we get to know which bond has what plan of payouts?
Hi Ashutosh, interest is credited every six months from issue dated. You can check interest payment dates for G-Secs here: https://tradingqna.com/t/interest-payment-dates-for-government-bonds-g-sec/144912
And SGBs here: https://tradingqna.com/t/interest-payment-dates-for-sovereign-gold-bonds-sgbs/145120
1 why sdl are not allowed for collateral ?
2. why some g secs in allowed list of clearing corp are not in your list ?
3. when list of gsec issue dates after sept 2023 will be available ?
Yes I’m thinking about it.
NO
It will be better if you can share a video showing all the procedure.
> 5. No capital gains on bonds purchased during issue and held until maturity. Interest is taxed at your slab rate.
you mean “no capital gain tax” right? Cause, as per my understanding, capital gain/loss will be there depending on price at what you purchased SGB 8 years ago and price at what you are selling now.
Yes, Sanket. It is capital gains tax. Fixed the typo.
Do i keep the funds in equity?
Yes, Nikita.
so g-secs will be stopped on coin ? or will continue there also?
Hi Sanket, G-Secs will be stopped on Coin.
After placing bid for SGB in primary market .Do I need to keep funds ready in kite?
Is it true that the SGB order will be cancelled automatically if I don’t have the funds available in kite app on the last date?
Hi Ritesh, you will have to maintain sufficient funds in your trading account on issue closing day else the order will be rejected.
I’ve placed order for SGB in September issue but have kept the amount required in the bank account. Do I need to shift it to Zerodha kite for successfully bidding.
Hi Kumari, you need to transfer the amount to your Zerodha account. If sufficient funds aren’t there in your account on the issue closing date (September 15, 2023), the order will be rejected.
What are the charges that are incurred if we buy the treasury bills or Gsec from secondary market ?
Hi Ravi, The brokerage for buying and selling on the exchanges is 0. However, charges like STT, Exchange Transaction Charge, Stamp Duty, etc. will be applicable. You can check list of all charges here: https://zerodha.com/charges/#tab-equities
When will CORPORATE BONDS be available on zerodha? Since a long time on coin it says coming soon
We’re working on it, Abhay. We’ll keep you posted.
Can you clarify on how much time it will take to pledge G Sec or SGB bought during issue.
Hi Mahesh, G-Secs and SGBs can be pledged once they are credited to your demat account and listed on the exchanges. G-Secs are alloted in T+2 working days after the auction on Friday. For SGBs it can take 15 days from the issue closure date.
Please avail it in kite app
Will be available soon, Dillip.
I have placed the bid in SGB. When this bid amount will be deducted ? Amount will be deducted from directly from bank account or fund should be available on Zerodha ?
Hi Suresh, the funds will be deducted on the issue closing date (September 15, 2023) from your trading account.
I am not getting 2.5%interest on SGB in my bank account.What should be done and where to check
Even I’m not getting the interest to my bank account. Not getting message notification as well. Please help on where and how to check.
The required money should be in the Demat account or Bank account for SGB and for G Secs ?
Yes, Ashutosh. You need to maintain sufficient funds in your trading account.
Is it possible to buy via kite app
Hi Senthilkumar, government bonds and sovereign gold bonds are currently available on Kite web and will soon be available on Kite mobile.
Hi,
What is the amount to be filled in SGB. For example it shows 5873 today?. Is that for 1 unit. If i need to buy say 2 units then should i type 11746/- . Same way for govt securities. also i saw it auto corrects the amount even if i type amount in excess . say i type 12000/- it corrects to 11746/-. Please change the GUI like normal buy and sell instead , by typing the qty but in multiples.
Thanks
The rate is fixed , you can only change the quantity and amount will be auto calculated!
Hi Rajesh, the minimum investment amount is fixed and you need to place bids in multiples of this. You can enter your desired amount and it’ll automatically get rounded off to the nearest quantity.
Also, we’ll note down your feedback and check if we can provide an option to enter the quantity.
If price of gold had fallen by maturity date, will I incur loss on redemption (excluding interest rate payment)?
how to invest in SGB .
Will I be able to see the amount of coupon that I will receive every year?…is there a table or something like that.
Hi, I have placed bid for SGB. For executing the order on last day, total available margin (Cash +
Collateral) will be considered. Right? Means both cash plus non cash both will be considered?
is it possible to buy RBI Floating rates bonds too through Zerodha? if so could you please share the link.
Hi team
how do I buy T-bills through zerodha platform? please give me he steps or link
thank you
sree
Hi , I have placed the bid for SGB, but there is no confirmation email and I can’t check the status on Kite mobile , can the system be updated to send a confirmation of bid placed or make the bid available to see in Kite mobile ? Thanks
Hi
Recently I saw a bond 1018GS2026 , It traded at 130/-. My doubt is…as the GSec earns only 10.18, even if accumulated interest is also worked out…why it sells at so high a price of 130 ?…Can you enlighten me on the logic behind this ?
Hello,
I have placed big for SGB today and have transferred the bid amount to the zerodha demat account. How do I get know if the bid is placed and amount is debited.
Hi Amogh, the order will be processed on the issue closing date, you can check this on the order window. Once the order is processed you will get an email on the registered email ID.
Hi, Is there any charges on SGB if we purchase on new bond and sell during maturity? As Banks are also offering the sale of SGB. Please explain the difference between Bank vs Zerodha buying,
There are no charges for investing in new issues of SGBs on Kit, Ashish.
I want to invest in SGB Sept 23 issue. But I find the process of applying in Kite very very cumbersome. Still unable to make out how to do. Why can’t you have a single app for all kinds of investments
Hi Rangrajan, sorry to hear this. Could you please elaborate on the difficulties you seem to have faced?
How will be the payment for SGB bid? Will it be debited from Fund balance in zerodha or directly from Bank account?
Hi Rijesh, the funds will be debited from your trading account.
Trading account means Zerodha – Kite funds or bank account?
Please clarify
Kite funds, Indra.
I have placed SGB bid first than added amount to kite account.
Will that be a issue for payment for the bid?
No, Hemlata.
SGB Bid is placed, how the amount will be debited from my account or i need to keep the amount in Zerodha funds within my account?
Hi Hemant, you need to have sufficient funds in your trading account.
I have already placed an order in coin site for Sep SGB. Do in need to cancel the order in coin app and place the same in kite app or order placed o. Cpi. Is enough ?
No Ravi. You don’t have to cancel the order placed on Coin. For now you can place an order on Coin as well.
For SGB order throught zerodha.
Money will be deducted from funds in zerodha, or from my bank account?
I have a similar question. I have placed a bid. Now where should I deposit the money? In zerodha account?
Yes, Pankaj. You have to maintain funds in your Zerodha account.
From your Zerodha account, Arun.
I hv purchased 10 gm sgb today. Still want to purchase more gms with new order. What to do? Pl suggest.
Iam starting investment ment today
What action needs to be taken after placing the bid? How will I make the payment? Will it be deducted from the funds or will I have an option to make the payment through UPI?
Can NRIs invest in Sovereign Gold Bonds? I have NRO non PIS account with zerodha.
Has interest been credited for SGBs, this year(2023) I’m unable to see it in bank account, usually by june -july I used to get it.
Hi, if you are not getting interest payment for SGBs, you can write to CDSL & NSDL who act as RTAs. You can write to CDSL from here and NSDL here.
The interest is paid out every 6 months from the date of issue of the bond. The date of issue can be found here.
activat nhi ho rha ha
I had invested in SGB and DP ID & Client ID was given of my Zerodha, purchase was done on 11-09-2023 but I am not able to check in zerodha about allotment of SGB. Zerodha statement also not showing details of holding SGB. How i can check and track my allotment and where in Zerodha ID.
HI Piyush, the allotment dates are tentative and can change. Generally it takes 10–15 days from the issue closure date for SGBs to get credited to your demat account. You will, however, get an email from CDSL once the SGBs are credited
I have applied for SGB II . The status is showing “PROCESSED”.
Then how do I check in my dmat account.
Hi, the allotment dates are tentative and can change. Generally it takes 10–15 days from the issue closure date for SGBs to get credited to your demat account. You will, however, get an email from CDSL once the SGBs are credited
Hi,
I’ve purchased the sovereign gold bond thru Zerodha. Its been processed and money got debited from zerodha account. But I could not see the processed bonds. Suggest me how Can I find it. Thanks
HI Prasanna, the allotment dates are tentative and can change. Generally it takes 10–15 days from the issue closure date for SGBs to get credited to your demat account. You will, however, get an email from CDSL once the SGBs are credited
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