What is debt market in India?



How is debt market different from or similar to equity market?

What is debt market in India?
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5 Replies to “What is debt market in India?”

  1. dear, as per my knowledge debt mkt means any company /s debentures,govt. bonds, etc. debt mkt is different because this is more safe than another mkt.


  2. The debt markets in India

    There are three main segments in the debt markets in India, viz., (1)
    Government Securities, (2) Public Sector Units (PSU) bonds, and (3)
    Corporate securities.

    The market for Government Securities comprises the Centre, State and
    State-sponsored securities. In the recent past, local bodies such as
    municipalities have also begun to tap the debt markets for funds. Some of the PSU bonds are tax free, while most bonds including government
    securities are not tax-free. Corporate bond markets comprise of commercial paper and bonds. These bonds typically are structured to suit the requirements of investors and the issuing corporate, and include a variety of tailor- made features with respect to interest payments and redemption.

    Equity Market

    Equity Market refers to a market where securities are traded after being
    initially offered to the public in the primary market and/or listed on the
    Stock Exchange. Majority of the trading is done in the secondary market.Secondary market comprises of equity markets and the debt markets.


  3. Debt Instruments are of various types like Bonds, Debentures, Commercial Papers, Certificates of Deposit, Government Securities (G secs) etc


  4. Different types of debt instruments.

    While searching for investment products which is aimed at capital protection and fixed returns, we turn our attention to various debt products available for investment. Let us go through some of them which is not very familiar with the normal investor community.You can see the following categories in the portfolio of almost all debt mutual funds.

    1. Central Govt Securities – These are the most safest debt investment that one can make. They don have any default in payments.Even in case of bad situations, the government can print currency and payback the investment to the investors.

    2. State Govt Securities – These are provided by respective state government and are less liquid compared to central govt securities. It has a higher yield than central govt securities and it may default on payment but in history it has never happened.

    3. Public sector bonds – These are issued by public sector undertakings who borrow funds from the markets in terms of bonds.

    4. Domestic Financial Institutaion bonds – These are provided by financial institutions like IDBI,ICICI and these are unsecured bonds.

    5. Corporate Debentures – Private sector companies raise fund from investors through corporate debentures.

    6. Commercial Paper – Private companies meet short term(1-6 months) fund requirements through commercial paper.

    7. Certificates of Deposit – These are issued by banks and financial institutions.

    Apart from these , there are other common products such as kisan vikas patra(money doubles in 8 years 7 months),NSC,Post office Deposits,Senior citizen scheme in post office,GOI bonds,PPF and Bank FDs.






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