| The key indicator of a country's fiscal stability is the extent of diversity of its bond market. Everyone in this world is in need of money. People need money to maintain their livelihood. Companies or enterprises need funds to expand their operations. Government needs funds for building up infrastructure and also to finance projects for upliftment of society.
Lack of funds is a common problem for most of the large organizations. Most of the time the loans from commercial banks fail to meet their investment needs. However funds required for investment purpose can be raised by issuing bonds and selling those to public.
Bond is nothing but a certificate of debt (usually interest bearing), which is issued by government or companies to raise funds. So it is like a loan for which the common people are the lenders.
In the Indian bond market there are several types of bonds namely government securities, corporate bonds, commercial papers, treasury bills, strips etc. Some bonds are with fixed interest rates and some are floating rate bonds. For the fixed interest bonds, the interest rates remain fixed till the maturity period. But for floating rate bonds interest rates keep on changing with the changes in market rate of interest.
Eligibility Criteria
Individual and a Hindu Undivided Family are the two entities that can own bonds. Individual can hold bonds
- In their own capacity
- On joint ownership with others
- On the ground of anyone or survivor with individual capability
- For a minor as legal guardian
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