Debt Instruments are obligations of issuer of such instrument as regards certain future cash flow representing Interest & Principal, which the issuer would pay to the legal owner of the Instrument. They can also be said to be tradable form of loans.
Debt Instruments are of various types like Bonds, Debentures, Commercial Papers, Certificates of Deposit, Government Securities (G secs) etc. The Government Securities (G-Secs) market is the oldest and the largest component of the Indian debt market in terms of market capitalization, trading volumes and outstanding securities. The G-Secs market plays a vital role in the Indian economy as it provides the benchmark for determining the level of interest rates in the country through the yields on the government securities which are treated as the risk-free rate of return in any economy. The reserve Bank of India has permitted Primary Dealers, Banks and Financial Institutions in India to do transactions in debt instruments among themselves or with non-bank clients. Debt instruments provide fixed return declared as coupon rate. Retail investors would have a natural preference for fixed income returns and especially so in the current situation of increasing volatility in the financial markets. Now, retail investors are also showing keen interest in Debt Instruments particularly in the Central Government Securities (G-secs).For an individual investor G-secs are one of the best investment options as there is zero default risk and lower volatility in case of G-secs.SBI DFHI is a major player in G-Secs market and widely deals in other debt instruments also.
The distinguishing factors of the Debt Instruments are as follows: –
- Issuer class
- Coupon bearing / Discounted
- Interest Terms
- Repayment Terms (Including Call / put etc.)
- Security / Collateral / Guarantee
SBI DFHI Ltd. has several options like SBI DFHI Invest, SBI DFHI Trade and SBI DFHI Invest Plus (details available on website) through which investors can participate in the G-Sec and Corporate Debt Market.