Context:
States will have to pay additional premium over Central government securities to meet the record high borrowing target for three months through March, which could further pressure banking liquidity, investors said.
Central Government Securities
Central government securities, also known as G-Secs, are debt instruments issued by the central government to raise capital. Generally, G-Secs are considered as risk-free gilt-edged instruments, as there is almost no possibility of default.
- In India, the Central Government issues treasury bills and dated securities while the State Governments issue only dated securities, which are known as the State Development Loans (SDLs).
- How are G-Sec issued?
- The Reserve Bank of India (RBI) manages the issuance of G-Sec, conducting auctions every Friday on behalf of the center.
- Types of G-Sec
- G-Sec can be short-term or long-term. Short-term G-Sec are called treasury bills and have a maturity of less than one year. Long-term G-Sec are called government bonds or dated securities and have a maturity of one year or more.
