NISM-Series-X-A: Investment Adviser (Level 1) · Securities Market Segments

Debt Market Segments: G-Secs, T-Bills, Corporate Bonds, CP and CD

Updated 11 October 2026 · Fact-checked

The debt market is where borrowers raise money through fixed income instruments. It splits into the money market (up to one year) and the bond market (longer). Government securities, T-bills, corporate bonds, CP and CD sit in different segments. To solve questions, identify the issuer, tenor and interest type first.

Understand Debt Market Segments

A debt instrument is a loan you give to a borrower. The borrower pays interest and returns the principal on a set date. The debt market is where these instruments are issued and traded.

The first split is by tenor. The money market deals in instruments with original maturity of up to one year. The capital market side of debt, often called the bond market, deals in instruments longer than one year.

The second split is by issuer. Government securities (G-Secs) are issued by the Central Government and by State Governments (state ones are called State Development Loans, SDLs). They carry sovereign backing, so credit risk is considered very low. Treasury bills (T-bills) are short-term government instruments issued at a discount and redeemed at face value. They pay no coupon. Standard T-bill tenors are 91 days, 182 days and 364 days. Dated G-Secs have longer tenors and usually pay a periodic coupon.

Corporate bonds are issued by companies, public sector undertakings and financial institutions. They carry credit risk, so they are rated by credit rating agencies and usually offer a higher yield than G-Secs of similar maturity. Commercial paper (CP) is an unsecured short-term promissory note issued by companies. A certificate of deposit (CD) is a short-term deposit instrument issued by banks and certain financial institutions. Other money market instruments include call/notice/term money, repos and tri-party repo, and cash management bills.

The third split is by participant. The wholesale segment is dominated by large institutions such as banks, insurers, mutual funds and primary dealers, with large ticket sizes. The retail segment lets individuals buy G-Secs and T-bills in small amounts, for example through the auction process via the exchanges' platforms or the RBI Retail Direct facility. The RBI is the main regulator for G-Secs and money markets, and SEBI regulates the corporate bond issue and listing side.

Key formulas to remember

Money market vs bond market: Original maturity ≤ 1 year → money market; > 1 year → bond market; Use this first to place any instrument.
T-bill return (discount instrument): Yield = (Face value − Price) ÷ Price × (365 ÷ Days to maturity); T-bills pay no coupon. The gain is the difference between purchase price and face value.
Standard T-bill tenors: 91 days, 182 days, 364 days; Learn these three exactly. Do not confuse them with 90, 180 or 365.
Issuer and risk: G-Sec/T-bill: sovereign, very low credit risk; corporate bond/CP/CD: credit risk of issuer; Higher credit risk generally means higher yield.

How to solve Debt Market Segments questions

Use this method for any question that asks you to identify, compare or classify debt instruments.

1Read the question and note the key words: issuer, tenor, coupon or discount, and whether it asks about wholesale or retail.
2Decide the tenor bucket. Up to one year means money market; longer means bond market.
3Identify the issuer. Government gives G-Sec, SDL or T-bill. A bank gives a CD. A company gives CP or a corporate bond.
4Check how return is paid. A discount instrument (T-bill, CP, CD usually) has no coupon. A dated G-Sec or bond usually pays a coupon.
5Think about risk. Sovereign means minimal credit risk. Corporate or bank paper carries credit risk, so ratings matter.
6Check the participant or regulator angle if asked, such as wholesale versus retail or RBI versus SEBI.
7Eliminate options that mix features, such as a T-bill with a coupon or a CD issued by a company.

Quickest way: Three-question filter

When to use it: Use when you have under a minute for a classification or comparison MCQ.

Who issues it? Government, bank or company.
How long is it? Up to one year or more.
Is there a coupon? If not, it is likely a discount instrument.
Match the answer to the first option that fits all three, and reject any option that breaks one.

Common mistakes in Debt Market Segments

Saying T-bills pay periodic interest like dated G-Secs.
Both are government instruments, so students assume the same payout.
Fix: T-bills are issued at a discount and redeemed at face value. The gain is the discount.
Treating CP and CD as the same instrument.
Both are short-term money market paper.
Fix: CP is a promissory note issued by companies. CD is a deposit instrument issued by banks and certain financial institutions.
Calling corporate bonds risk-free or equal to G-Secs in risk.
Students focus on fixed interest and ignore the issuer.
Fix: Corporate bonds carry credit risk. G-Secs are backed by the sovereign.
Placing a 364-day T-bill in the bond market.
It feels like a long instrument.
Fix: Original maturity up to one year means money market, so 364 days is money market.
Mixing up wholesale and retail segments.
Both trade the same G-Secs.
Fix: Wholesale means large institutional trades. Retail means small-ticket participation by individuals.

Worked examples

Example 1

A T-bill with face value ₹100 is bought at ₹98 and has 182 days to maturity. Find its annualised yield using a 365-day year, rounded to two decimals.

Show the solution

Gain = 100 − 98 = ₹2.
Return on price = 2 ÷ 98 = 0.020408.
Annualising factor = 365 ÷ 182 = 2.00549.
Yield = 0.020408 × 2.00549 = 0.040928.
As a percentage, this is about 4.09%.

Answer: About 4.09% per annum.

Example 2

Which instrument is a short-term unsecured promissory note issued by a company, with maturity up to one year?
A. Certificate of deposit
B. Commercial paper
C. Treasury bill
D. Dated government security

Show the solution

Issuer is a company, so rule out T-bill and dated G-Sec, which are government instruments.
A certificate of deposit is issued by banks and certain financial institutions, not by companies in general.
A short-term unsecured promissory note from a company is commercial paper.

Answer: B. Commercial paper

Exam tips

Memorise the three T-bill tenors: 91, 182 and 364 days.
Questions often test the contrast between G-Sec and T-bill: coupon versus discount, and long versus short tenor.
For issuer questions, match CP to companies and CD to banks first, then check other details.
X-A has negative marking of 25% of the marks for the question, so skip only if you cannot remove at least two options.
In 2-mark caselet questions, a wrong answer costs more, so classify the instrument carefully before choosing.

Practice questions from Securities Market Segments

Debt Market Segments: frequently asked questions

What is the difference between a G-Sec and a T-bill?

A G-Sec is a government debt instrument, and dated G-Secs have longer tenors and usually pay a coupon. A T-bill is a short-term government instrument of up to 364 days, issued at a discount and redeemed at face value with no coupon.

Which money market instruments are there in India?

Common ones are T-bills, commercial paper, certificates of deposit, call, notice and term money, and repos. Cash management bills are also short-term government instruments.

What are commercial paper and certificate of deposit?

Commercial paper is an unsecured short-term promissory note issued by companies. A certificate of deposit is a short-term deposit instrument issued by banks and certain financial institutions.

Why do corporate bonds yield more than G-Secs?

Corporate bonds carry the credit risk of the issuer, while G-Secs are backed by the sovereign. Investors ask for extra yield to compensate for that risk.