Plan your investment
What Our Plans Cover
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Government of India dated securiti...
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Semi-annual coupon payments on mos...
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Return of face value at maturity
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Holding in demat or through RBI Re...
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Ability to sell on the exchange be...
Who Can Consider This Plan?
- Indian resident individual, HUF, trust, firm or company
- NRIs, subject to the specific issue permitting NRI investment
- A demat account for holding the securities
- PAN and completed KYC
- Minimum investment as specified in the issue terms
What May Not Be Covered?
- Protection against price falls if you sell before maturity
- Any tax exemption — interest is taxable at your slab rate
- Protection against inflation eroding a fixed coupon
- Liquidity comparable to equities on longer-dated securities
Always check the policy wording before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading investments companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced investments professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
Government securities are issued by the Government of India and carry sovereign credit — the lowest credit risk available in rupees. The interest and principal are backed by the sovereign, so the question of whether you will be repaid is effectively settled.
What remains is interest rate risk, and it is substantial on long-dated bonds. When market rates rise, existing bonds with lower coupons become less attractive and their prices fall. A ten-year bond sold three years in can be worth materially less than you paid, even though its repayment is certain.
Held to maturity, that price movement is irrelevant — you receive the coupons and your principal back. Sold early, it is the whole story. Which of those two applies to you should be decided before you buy, not afterwards.
Who should consider it
Investors wanting the safest rupee fixed income available. Investors matching a bond maturity to a dated future obligation. Anyone building a fixed income allocation with no credit risk.
Investors who may need the money before maturity should prefer shorter maturities, where price sensitivity to rates is far lower.
Benefits
- Sovereign credit — effectively no default risk in rupees
- A known coupon and a known maturity date
- Available in a wide range of maturities
- Retail access through the RBI Retail Direct platform
- Tradable on the exchange before maturity
- Useful for matching a dated future obligation precisely
What is included, and what is not
Read the right-hand column first. It is the one that tends to surprise people later.
Included
- Government of India dated securities and treasury bills
- Semi-annual coupon payments on most securities
- Return of face value at maturity
- Holding in demat or through RBI Retail Direct
- Ability to sell on the exchange before maturity
Not included
- Protection against price falls if you sell before maturity
- Any tax exemption — interest is taxable at your slab rate
- Protection against inflation eroding a fixed coupon
- Liquidity comparable to equities on longer-dated securities
Terms vary between providers and between plans from the same provider. The offer document you receive is what governs — we will walk you through it before you commit.
How it works with us
- 1 We separate the two risks before anything else Credit risk is whether you get repaid. Rate risk is what the bond is worth if you sell early. Different risks, different answers.
- 2 Horizon matched to maturity A bond held to maturity behaves very differently from one sold in year two. That decision comes before choosing the issuer.
- 3 Rating and issuer examined properly A yield well above the market is telling you something. We read the rating rationale, not just the letter.
- 4 Purchase through the exchange or a registered platform Bonds settle into your demat account. We handle the mechanics and confirm what you actually bought.
- 5 Coupons tracked, maturity diarised Interest dates, reinvestment and redemption. Bonds are simple to hold and easy to forget about.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- Decide before buying whether you will hold to maturity. Everything about how this investment behaves follows from that answer.
- Long-dated bonds are far more sensitive to rate changes than short-dated ones. If rates might rise, a shorter maturity limits the damage.
- Interest is fully taxable at your slab rate. Compare the after-tax yield against alternatives rather than the headline coupon.
- RBI Retail Direct gives individuals direct access without an intermediary. It is worth knowing about, because the alternative routes carry costs.
- Sovereign credit removes default risk. It does not remove price risk, and conflating the two is the most common error in this asset class.
Documents required
- PAN card
- Aadhaar or other identity proof
- Address proof
- Demat account details
- Bank account proof for coupon and redemption credit
- Completed KYC with the intermediary
Frequently Asked Questions
If government bonds are risk-free, why can I lose money?
Because there are two separate risks. Credit risk — whether you get repaid — is effectively nil with sovereign debt. Interest rate risk is not: if rates rise, the market price of your existing bond falls. Held to maturity that is irrelevant; sold early it is the whole story.
How do I buy them directly?
Through the RBI Retail Direct platform, which lets individuals participate in government securities auctions and hold them without an intermediary. They can also be bought on the exchange or accessed through gilt mutual funds.
Which maturity should I choose?
One that matches when you need the money. If you have a dated obligation in seven years, a seven-year bond removes rate risk entirely for that purpose. If you may need to sell early, shorter maturities are far less price-sensitive.
Is the interest tax-free?
No. Interest on government securities is taxable at your slab rate. The sovereign backing relates to credit, not to tax. Compare the after-tax yield rather than the coupon.
Are they better than a fixed deposit?
They carry lower credit risk than a bank deposit above the insured limit, and they can be held for much longer maturities at a locked rate. A deposit is simpler and has no price risk. Which is better depends on the amount, the horizon and whether you might need to exit early.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.