The plain answer
Government securities, or G-Secs, are bonds issued by the Indian government, held in your demat account like any other security. You buy them through a broker, interest credits to your linked bank account on the coupon dates without TDS, and the principal returns at maturity. The issuer is sovereign, which makes credit risk minimal; the price still moves with interest rates, which makes them bonds, not deposits.
The three numbers on a dated G-Sec: the face value, the fixed coupon paid half-yearly, and the maturity date, which can be decades out. Treasury bills are the short version, issued at a discount with no coupons. Both sit in the demat account under their ISINs like everything else, and both appear in the same CAS.
The statement reading: a G-Sec entry in the CAS shows the ISIN, the issuer (central or state), the coupon, the maturity date and the face value held, the same fields a corporate bond entry shows. The difference is invisible on the statement and total in the risk table: the name of the issuer. That is the one field that decides the credit question, and on a G-Sec it is the government.
What a G-Sec is
A G-Sec is the government borrowing documented as a tradable bond. Dated securities carry a fixed coupon paid half-yearly; treasury bills are issued at a discount to face value and redeemed at face, with the difference being the return, at tenors up to 364 days. State development loans, issued by state governments, sit in the same family with the same demat mechanics.
The government creditworthiness is the reason the coupon is lower than a corporate bond coupon, which is the entire risk-return trade in one sentence. What the sovereign issuer removes is credit risk; what it cannot remove is price risk, because every fixed-coupon security reprices when market interest rates move.
The market reality: G-Secs form the deepest bond market in India, but most of that depth is institutional. Retail access runs through two doors: the broker on the exchange, and the RBI Retail Direct portal. Both credit interest to your bank account, and both produce a holding you can see in a statement.
Primary auctions are where new G-Secs are born, and they are the mechanic behind the Retail Direct route. The RBI publishes an auction calendar, competitive bidders submit yield bids, and the weighted average becomes the price for everyone. A retail investor bids non-competitively: no yield choice, just a quantity, allotted at the average price the auction produces. The design means a retail participant gets the same price as the institutions in that auction, which is a rare property in financial markets and the reason the route exists.
One terminology note: dated G-Secs carry a face value of ₹100 per unit, and prices and coupons speak in that unit, while order minimums speak in ₹10,000 face blocks. A 7% coupon is ₹7 per year per ₹100 of face, paid ₹3.50 half-yearly, and a price of 98 means ₹98 per ₹100 of face. The per-unit and per-order languages coexist on the same screen.
How to buy them
- Through a broker. The broker platform lists available G-Secs, and the order settles into your demat account on T+1 like a share. For an investor who already holds a demat account this is the natural route: the same account, the same statements, and the security appears in the CAS alongside everything else.
- Through RBI Retail Direct. The RBI portal lets individuals open a Retail Direct Gilt account, free of charge, and buy in primary auctions with non-competitive bids or trade in the secondary market through the RBI platform. Interest and maturity proceeds credit to the linked bank account.
The direction of travel is visible in the rulebook: in June 2026 the RBI published draft rules proposing to let Retail Direct investors hold and transact in G-Secs through their demat accounts with banks and SEBI-registered depositories, keeping the ₹10,000 minimum. The draft does not change the current routes today; it confirms that the demat account is becoming the default home for retail G-Sec holdings.
The broker route in the app reads like any order screen: search the security by name or ISIN, see the coupon and maturity beside the price, and order during market hours for T+1 settlement into the demat. The holding then sits quietly, paying half-yearly coupons to the bank while the CAS lists it, which is the entire operational story of a G-Sec bought to hold. The only repeated decision is what to do at maturity: reinvest, spend, or return to deposits.
The Retail Direct route has its own operational layer: the RBI runs a portal and a mobile app for the gilt account, with auction calendars, holdings and statements inside, and an auto-bid facility for treasury bills. The account is free to open and hold, which makes the broker route and the RBI route cost-equal for the plain buy-and-hold case; they differ in where the statements live and whether primary auctions are available.
Non-competitive bidding is the retail entry ticket to the auctions: the bid fixes only the quantity, and the allotment happens at the weighted average the competitive side produces. The design removes the pricing decision from the retail participant, which is the property that keeps the auction route usable for first-time buyers.
Minimums and order mechanics
The RBI Retail Direct minimum is ₹10,000 face value for dated G-Secs, treasury bills and state development loans, in multiples of ₹10,000, with a maximum of ₹2 crore per security. Account opening and holding under the scheme cost nothing, and payment runs through net banking or UPI.
Through a broker on the exchange, G-Secs list under the exchange retail framework, and broker platforms surface their own order minimums, typically the same ₹10,000 retail threshold. Before ordering, confirm the minimum and the bid-ask spread in the app, because the spread is the cost you actually pay on a small order, not the coupon.
Opening the Retail Direct Gilt account takes the standard identity set: a rupee savings account in India, PAN, an officially valid document for KYC, a registered mobile number and email, with nomination required. The account costs nothing to open or hold, payment runs through net banking or UPI, and interest and maturity proceeds credit automatically to the linked bank. The portal itself carries the current forms and limits, and it is the authoritative source when the numbers on this page age.
Reading a G-Sec quote takes one adjustment. The screen shows a clean price per ₹100 of face value, and the yield beside it is the yield to maturity at that price, the number that reconciles coupon and price into a single annual figure. The amount you actually pay adds the accrued interest since the last coupon on top of the clean price, the same convention the corporate bond screen uses.
Interest and maturity
| Cash flow | Where it lands | When |
|---|---|---|
| Coupon interest | Linked bank account | Half-yearly on the coupon dates |
| Principal | Linked bank account | At maturity |
| Sale proceeds (if sold early) | Trading account, then bank | T+1 after the sale |
Two details matter more than the table suggests. First, the coupon is paid on the half-yearly coupon dates fixed at issue, not on your purchase date. If you buy between coupon dates, the price you pay includes the accrued interest since the last coupon, so your first interest receipt partly returns money you already paid.
Second, no TDS applies on government securities interest under Section 193, so the gross coupon lands in the bank. The income is still taxable at your slab, and the reporting is yours, because what the government does not withhold it also does not forget.
The contrast with corporate bonds makes the point: a listed NCD coupon above the ₹10,000 annual threshold arrives net of 10% TDS, while the G-Sec coupon arrives gross. The difference is a tax administration choice about the issuer, not about the holder, and it changes the cash timing: G-Sec interest is received in full and settled at filing, corporate coupon interest is received net and reconciled through Form 26AS. Both are slab income in the end; the roads differ.
Maturity day has one mechanical detail: the principal credits to the linked bank account on the maturity date, and the security entry then drops out of the demat ledger. There is no maturity action to take, no form to file and no charge deducted, which is the quietest event in the securities system. The CAS simply shows the position gone and the bank statement shows the money arrived.
G-Sec vs corporate bonds vs shares
| Aspect | G-Sec | Corporate bond / NCD | Share |
|---|---|---|---|
| Issuer | Government | Company | Company |
| Return | Fixed coupon | Fixed coupon | Dividends and price |
| Credit risk | Minimal (sovereign) | Issuer-dependent | Business risk |
| Price movement | Moves with interest rates | Moves with rates and credit | Moves with the business |
The table bottom line: the sovereign issuer removes credit risk, not price risk. G-Sec prices move with interest rates exactly like corporate bond prices, and a sale before maturity realises whatever the market pays. The demat mechanics are identical across all three rows, which is the point of the single account structure.
Liquidity completes the comparison. G-Secs on the exchange trade in a thinner retail book than large stocks, with wider spreads, and the institutional depth sits in a separate market the retail order never sees. A corporate bond can be thinner still. The practical reading: the deeper the retail order book, the closer the quoted price is to what an actual sale receives, and G-Secs sit between shares and corporate bonds on that measure.
The institutional background explains the depth: banks hold G-Secs to meet their statutory liquidity requirements, which makes the government market the anchor of the Indian bond system. The retail investor borrows that market's scale at retail minimums, which is the unusual combination this page describes.
A worked example
You buy ₹50,000 face value of a 7% coupon dated G-Sec maturing in 2035, at face price. The coupon pays ₹3,500 a year, ₹1,750 every six months, directly to the linked bank account, with no TDS withheld.
Interest arithmetic: on each ₹1,750 half-yearly credit nothing is withheld, and at filing time the year ₹3,500 is added to your income at your slab. The bank statement shows the credits; the CAS shows the security; the two records reconcile on the coupon dates.
Price arithmetic: if interest rates rise and you sell before maturity, the price falls, roughly in proportion to the bond duration, and on a long maturity that can mean several percentage points of price. Selling ₹50,000 face at ₹96 recovers ₹48,000, a ₹2,000 loss that offsets the coupons collected so far. Holding to 2035 returns the full ₹50,000. That comparison is the entire G-Sec decision in one example.
The reverse scenario closes the loop. Rates fall after your purchase, the same ₹50,000 face now quotes at ₹104, and you sell for ₹52,000. The ₹2,000 price gain plus the coupons collected is the total return, and the gain is a capital event under the listed-debt schedule, which your CA applies at filing. The example is the mirror of the loss case: the price leg can work either way, the coupon leg works on schedule, and only the combination over your holding period is the result.
Inflation completes the arithmetic. A 7% coupon is a nominal number: the real return it buys is 7% minus what prices do. The coupon and principal are fixed in rupees, so the purchasing power of the return is not. That is not a criticism of the instrument; it is the arithmetic every fixed-coupon security shares, and it explains why the market yield, not the printed coupon, moves with inflation expectations.
Why G-Sec prices move
A G-Sec price moves inversely to its yield, and the yield moves with the interest-rate environment. When the RBI policy rate path shifts, when inflation expectations move, or when demand for government paper changes at auction, yields across tenors reprice, and a dated security bought earlier changes price accordingly. None of that touches the coupon or the maturity; it touches only the price a seller receives before maturity.
The reading for a holder is mechanical: the maturity date is fixed, the coupons are fixed, and the only moving part is the price at which an early exit happens. Investors who hold to maturity never see the movement; investors who sell early see it fully. That is the entire difference between a G-Sec and a deposit in one paragraph.
G-Secs vs deposits vs debt funds
Three structures hold sovereign exposure three ways. A bank deposit has no market price and a fixed term, with deposit insurance up to the prescribed limit. A gilt fund pools government bonds, prices daily at NAV and charges an expense ratio. A direct G-Sec fixes the coupon and the maturity, pays no running fee, and reprices on the market in between.
The mechanics differ the way bonds differ from funds: the direct security sits in your demat under its ISIN with coupons to your bank, while the fund unit sits in a folio or demat with the fund managing the basket. The choice is about maturity, fees and control, not about which issuer, because all three point at the same sovereign balance sheet. DematOpen is an Authorized Person of Upstox and does not provide investment advice.
What people usually get wrong
G-Secs cannot lose money
The coupon and principal are sovereign-backed, but the price between issue and maturity moves with interest rates. Selling early can realise a loss.
G-Secs need a separate account
The broker route uses your existing demat account. The RBI Retail Direct scheme is an alternative, not a requirement.
G-Sec interest accumulates in the demat
Interest is cash and lands in the bank account on the coupon dates. The demat account holds the security, as always.
The coupon rate is my return
The coupon is the cash schedule. Buying above face yields less than the coupon, buying below face yields more, and yield to maturity is the number that reconciles them, exactly as with corporate bonds.
Questions people ask
Yes. Brokers offer G-Secs through their platforms, and the securities credit to your demat account under their ISINs. The buying route is the same account you already use for shares, which is the natural choice for an investor who already holds a demat account.
To your linked bank account on the coupon dates, through the RBI payment arrangements. Like every cash flow on this site: the demat holds the security, the bank receives the money.
Credit risk is sovereign, which makes default extremely unlikely. Price risk remains: bond prices move with interest rates, and selling before maturity can realise a loss. Safe issuer, moving price, same as every bond.
On the RBI Retail Direct portal the minimum is ₹10,000 face value, in multiples of ₹10,000, with a maximum of ₹2 crore per security. Broker platforms list G-Secs with order minimums in the same range. Confirm the current minimum with your broker before ordering.
No. Interest on central and state government securities is exempt from TDS under Section 193. The gross interest credits to your linked bank account, and the income is still taxable in your hands at your slab, which is the pair of facts that usually surprises first-time buyers: no TDS, but the income is yours to report.
A dated G-Sec carries a fixed coupon paid half-yearly and a maturity that can be decades out. A treasury bill is issued at a discount to face value with no coupon and a tenor of up to 364 days, with the difference between the issue price and the face value being the return. Both sit in the demat account under their own ISINs.
Sources
- Reserve Bank of India. RBI Retail Direct scheme portal. Accessed 16 August 2026.
- Reserve Bank of India. Retail direct scheme documentation. Accessed 16 August 2026.
- The Hindu BusinessLine. “RBI plans to allow retail investors to invest in G-Secs via demat account route.” Accessed 16 August 2026.
- NSDL. National Securities Depository Limited, official website. Accessed 16 August 2026.