FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
Zerodha Trade@20
Are you an NRI and looking for risk-free or low-risk investment instruments in India? If yes, government securities is the ideal or the best-suited option for conservative investors like you. NRIs, FPIs, and OCIs can invest in government-backed investment securities like T-bills (treasury bills) and government bonds.
Let’s check out what are the types of government securities allowed for NRI investment, the reasons on why to invest in G-secs in India, and how to invest in it.
Before proceeding, let’s first understand what is G-Sec or government securities.
As the name suggests, government securities popular as G-Sec are the instruments issued by the Central or State government of India. As G-secs carry sovereign commitment regarding repayment of principal and payment of interest, it is considered as incredibly safe investment option available to both residents and non-residents. As an investor, you do not need to worry about losing your capital invested in G-sec.
Different types of G-secs are issued by the government for short-term and long-term investment horizons. Following are the types of government-issued securities available for NRI investment in India.
Government-issued treasury bills or T-bills are short-term debt instruments issued with maturity periods of 91 days, 182 days, and 364 days.
T-bills pay no interest to investors however, they are issued at a discount value while redeemed at face value on maturity.
Government in consultation with RBI issues cash management bills to meet the temporary cash flow requirements. CMB has a maturity period of less than 91 days. Likewise T-bills, CMBs do not pay any interest but are issued at a discount and redeemed at par or face value.
Government-dated securities pays coupon interest (fixed or floating) at regular interval till maturity. Indian government issues such types of securities to fund various projects or balance the country’s fiscal deficit.
These are long-term investment instruments with a maturity period of 5 years to 40 years.
RBI issues government securities in the form of bonds and since 1st April 2020, the government permitted NRIs to invest in government bonds through the “Fully Accessible Route”. Like residents, non-resident Indians are also allowed to invest in government bonds like bonds issued by PSUs (Public Sector Undertakings).
Fixed-rate bonds carry a fixed coupon interest payment for the entire duration of the bond till maturity. However, floating interest rate bonds carry a variable coupon rate. Thus, the coupon interest payment keeps changing as per the announced rate.
Interest on government securities is usually paid on a half-yearly basis.
As guaranteed by the government, G-secs are risk-free, safe, and secure investment instruments with zero default risk. Earlier, investment in government securities was restricted to banks, corporates, and financial institutions but in 2021, it was opened for retail investors as well.
Whether you are a resident or non-resident, you are eligible to invest in government securities. Also, there is no maximum ceiling or restriction on capital invested in G-secs.
US and Canada-based NRI investors cannot subscribe to government securities.
As an NRI, you are allowed to invest in G-secs using funds from an NRE or NRO account. NRI investment held through the NRE account undertakes investment on a repatriation basis whereas the NRO account is not repatriable.
The process to invest in government securities as an NRI is as simple and identical to that of the resident. One can participate in the online bidding process to subscribe to G-secs through broker or bank.
NRI brokers in India may also allow customers to bid for government securities online through their platform. Whenever a new G-sec is issued by the government, the broker will update its portal.
In India, brokers like Zerodha, Fyers, etc. allow NRIs to participate in the debt products like government securities or bonds, and T-bills using NRO Non-PIS accounts.
Government securities (G-secs) as backed by sovereign guarantee is considered the safest investment option for NRIs. NRI can choose to invest in short-term instruments like treasury bills or invest in long-term government bonds to get a regular interest income every half-year and the principal is repaid on maturity.
Want to start your investment journey, join India’s Pioneer Discount Broker – ZERODHA – Free Delivery Trade, Maximum Rs 20 for F&O and Intraday, Free Direct Mutual Fund investment.Open Zerodha Account
Yes, holding a demat account for NRI in India is mandatory to safely store all your investment in Government securities.
You can also buy government securities through your stockbroker’s platform provided that your broker provides investment in t-bills and G-sec.
India’s popular discount broker, Zerodha allows both residents and NRIs to subscribe to government securities on the Kite platform. NRI customers can place a bid to purchase T-bills and G-secs using NRO non-PIS account only.
Steps to invest in G-sec with Zerodha:
No, unlike NRI equity investment, there is no maximum investment limit for NRI investment in government securities.
There are many reasons that makes government securities a suitable investment option for NRI. Here is the list: