How to buy government bonds?

Through RBI Retail Direct portal (rbiretaildirect.org.in). Open a free account with PAN and bank details. You can buy G-Secs, T-Bills, and SGBs directly.

What about RBI Floating Rate Bonds?

RBI 7.35% bonds (floating, reset every 6 months) offer decent returns with sovereign safety. 7-year lock-in with no premature withdrawal for most investors.

Are tax-free bonds still available?

New tax-free bonds haven't been issued since 2016. Existing ones trade on exchanges at a premium. They're attractive for 30% tax bracket investors as the effective yield is much higher.

Bank FD vs Government Bonds

Compare bank fixed deposits with government bonds (G-Secs, RBI bonds) for safe investing.

Criteria	Bank FD	Government Bonds
Returns	6-7.5%	7-7.5% (RBI bonds), market-linked for G-Secs
Safety	DICGC up to ₹5L	Sovereign guarantee (safest)
Liquidity	Premature withdrawal with penalty	G-Secs tradeable; RBI bonds locked
Tax on Interest	Taxable at slab rate	Taxable at slab rate
Capital Gains	N/A	Possible on G-Sec trading
Minimum Investment	₹1,000-₹10,000	₹10,000 (G-Sec via RBI Retail Direct)

Our Verdict

Government bonds offer marginally higher returns with sovereign safety — ideal for amounts above ₹5L (beyond DICGC insurance). For amounts under ₹5L, bank FDs are simpler with similar safety. G-Secs offer capital gain opportunity if rates fall.

Detailed Analysis

Both bank FDs and government bonds are safe-haven investments, but with subtle differences.

Bank FDs are familiar and easy to open. They're insured up to ₹5L per bank by DICGC. For amounts above ₹5L in a single bank, there's a small (theoretical) risk of bank failure. Senior citizens get 0.25-0.5% extra.

Government bonds carry sovereign guarantee — the safest possible investment. RBI Retail Direct platform now allows individuals to buy G-Secs starting at ₹10,000. G-Secs can be traded on exchanges, offering potential capital gains when interest rates fall.

Bank FD vs Government Bonds

Our Verdict

Detailed Analysis

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