vasudeo007

 Profile Answers by vasudeo007 

• Oct 12th, 2008

 

Debt securities are the securities which are debt in nature.

There are 2 kinds of funds raised by any company or government. 1st is called equity and 2nd is called debt. A company can raise both while government can raise only debt from people.

When debt is taken from people either by central government, state govts, Public Sector Undertakings etc or even by private companies then they issue a certificate to you stating that you have given Rs. xxx/- to them on x% rate of interest for x months/years. This certificate is called bond or debenture.

When bond is issued by private company then it is called debenture and when debentures are issued by governments then they are called bonds. They are same things with different names.

These bonds are tradeable unless specified. You can have few bonds in hand and sell them to anyone. These bonds are called debt securities.

Bonds' market or debt securities' market is bifurcated into 2. One is called Wholesale debt market and other is called Retail debt market. Retail debt means Kisan Vikas Patra, National Saving Scheme etc. They are not tradeable. You can take a Kisan Vikas Patra of as low as Rs. 1000/-.

While wholesale bonds are bought and sold daily. They have huge face value. Minimum of Rs. 5 lakh and above.

Government of India keeps on issuing bonds to public each day. These whole sale bonds do not carry names like Kisan Vikas Patra or National Saving Certificate etc. They are given names like GOI 10% 10Oct2018. Means Govt of India bond at 10% interest maturity on 10th Oct 2018.

Hope this satisfies your quest.