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Fixed Income

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What are debt market instruments?

Debt instruments typically have maturities of more than one year. The main types are government securities called G-secs or Gilts. Like T-bills, Gilts are issued by RBI on behalf of the Government. These instruments form a part of the borrowing program approved by Parliament in the Finance Bill each year (Union Budget). Typically, they have a maturity ranging from 1 year to 20 years.

Like T-Bills, Gilts are issued through auctions but RBI can sell/buy securities in its Open Market Operations (OMO). OMOs cover repos as well and are used by RBI to manipulate short-term liquidity and thereby the interest rates to desired levels. The other types of government securities include Inflation-linked bonds, Zero-coupon bonds, State government securities (state loans).

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Fixed Income

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