NISM-Series-VI: Depository Operations · Special Services - Debt Instruments and Government Securities

Government Securities and Their Types in India

Updated 11 October 2026 · Fact-checked

Government securities (G-Secs) are debt instruments issued by the Central or a State Government to borrow money. Treasury bills are short-term, issued at a discount, with maturity up to one year. Dated securities are long-term, usually pay periodic coupons. State development loans are dated securities issued by States.

Understand Government Securities and Their Types

A government security (G-Sec) is a tradable debt instrument issued by the Government of India or a State Government. The government borrows from investors and promises to repay. Central Government securities are considered to carry no credit risk, because the sovereign issues them in its own currency.

G-Secs fall into two broad groups by tenor. Treasury bills (T-bills) are money market instruments with original maturity of up to one year. In India they are issued in 91-day, 182-day and 364-day maturities. They carry no coupon. They are issued at a discount to face value and redeemed at par. Your return is the difference between the purchase price and the face value.

Dated government securities have original maturity of more than one year. They are usually issued with a fixed coupon paid half-yearly, and they are redeemed at face value on a stated date. Some are floating rate bonds, where the coupon resets periodically against a benchmark. The Central Government issues them to fund the fiscal deficit.

State development loans (SDLs) are dated securities issued by State Governments to meet their borrowing needs. They are typically fixed-coupon, with half-yearly interest, and are auctioned. They are not issued by the Centre, and a State is the borrower. The Reserve Bank of India (RBI) conducts the auctions and manages the public debt of both the Centre and the States.

For the depository exam, link the instrument to how it is held. G-Secs can be held in the SGL account with the RBI, in a CSGL account through a constituent, or in demat form with a depository. Depositories hold G-Secs in dematerialised form, and the exam tests the features and types more than the pricing.

Key formulas to remember

T-bill maturities: 91 days | 182 days | 364 days; T-bills are zero-coupon, issued at a discount, redeemed at face value. Original maturity is up to one year.
T-bill return: Return = Face value − Purchase price; No periodic interest is paid. The gain is the discount.
Dated security coupon: Half-yearly coupon = (Coupon rate × Face value) ÷ 2; Applies to fixed-rate dated securities that pay coupons twice a year.
Classification by tenor: Up to 1 year = T-bill; more than 1 year = dated security; State development loans are dated securities issued by States.

How to solve Government Securities and Their Types questions

Use this method for any question on types of government securities. Most questions test one clear feature, so identify the instrument first.

1Read the question and mark the key clue: tenor, coupon, issuer or pricing.
2Check the tenor. Up to one year points to a T-bill. More than one year points to a dated security.
3Check the issuer. A State Government points to an SDL. The Centre points to a central G-Sec or T-bill.
4Check the return type. A discount to face value and no coupon means a T-bill. A periodic coupon means a dated security.
5Check the holding or settlement clue. RBI account points to SGL or CSGL. A depository points to demat form.
6Eliminate options that mix features, such as a T-bill with a half-yearly coupon.
7Pick the option that matches every clue, not just one.

Quickest way: Tenor, issuer, coupon check

When to use it: Use when you have under a minute and the options mix features of T-bills, dated securities and SDLs.

Ask: is it up to one year? If yes, think T-bill, discount, no coupon.
If longer, think dated security with a coupon, usually half-yearly.
If a State is named as issuer, it is an SDL.
Reject any option that gives a T-bill a coupon or an SDL a Central issuer.

Common mistakes in Government Securities and Their Types

Saying T-bills pay a half-yearly coupon.
Students mix T-bills with dated securities because both are G-Secs.
Fix: Remember T-bills are zero-coupon. They are issued at a discount and redeemed at face value.
Thinking SDLs are issued by the Central Government.
The word 'development loan' sounds like a national instrument.
Fix: SDLs are issued by State Governments. Link the S in SDL to State.
Treating a T-bill as a long-term instrument.
Students focus on the word 'security' and forget that tenor decides the type.
Fix: T-bills have original maturity up to one year. Anything longer is a dated security.
Believing G-Secs of every issuer carry no credit risk.
Students over-extend the sovereign safety idea.
Fix: Treat the no-credit-risk idea as applying to Central Government securities. Do not assume it for SDLs unless the question says so.
Listing the T-bill maturities wrongly, for example 90 or 180 days.
Students round the numbers from memory.
Fix: Learn them exactly: 91, 182 and 364 days.

Worked examples

Example 1

Which of the following is a feature of a treasury bill? (a) Half-yearly coupon payment (b) Issued at a discount and redeemed at face value (c) Original maturity of ten years (d) Issued only by State Governments

Show the solution

Identify the instrument: a treasury bill.
Recall that T-bills are zero-coupon, so option (a) is wrong.
Recall that T-bills have original maturity up to one year, so option (c) is wrong.
Recall that T-bills are issued by the Central Government, so option (d) is wrong.
Option (b) matches: purchase at a discount, redemption at face value.

Answer: (b) Issued at a discount and redeemed at face value.

Example 2

An investor buys a 91-day treasury bill of face value ₹1,00,000 for ₹98,500 and holds it to maturity. What is the amount received at maturity and the gain?

Show the solution

A T-bill is redeemed at face value on maturity.
Amount received = ₹1,00,000.
Gain = Face value − Purchase price.
Gain = ₹1,00,000 − ₹98,500 = ₹1,500.
No coupon is paid in between, so the whole gain is the discount.

Answer: The investor receives ₹1,00,000 at maturity and earns a gain of ₹1,500.

Exam tips

Learn the T-bill maturities exactly: 91, 182 and 364 days. Options often change them slightly.
Questions usually test contrasts: discount versus coupon, up to one year versus more than one year, Centre versus State.
Note the holding clue. SGL and CSGL point to RBI-linked holding, while demat points to a depository.
Read every option. Trap options often mix a T-bill feature with a dated security feature.
Wrong answers cost marks in this exam, so skip a question only if you cannot eliminate at least two options.

Practice questions from Special Services - Debt Instruments and Government Securities

Government Securities and Their Types: frequently asked questions

What is the difference between treasury bills and dated government securities?

T-bills have original maturity up to one year, pay no coupon and are issued at a discount to face value. Dated securities have original maturity of more than one year and usually pay a periodic coupon. Both are issued by the Government.

What are state development loans (SDLs)?

SDLs are dated securities issued by State Governments to raise funds. They are usually fixed-coupon with half-yearly interest and are sold through auctions conducted by the RBI.

Which T-bill maturities are issued in India?

T-bills are issued in 91-day, 182-day and 364-day maturities. They are zero-coupon instruments sold at a discount and redeemed at face value.

Can G-Secs be held in demat form?

Yes. G-Secs can be held in dematerialised form with a depository through a depository participant. They can also be held in SGL or CSGL accounts linked to the RBI.