Retail investors should lock in interest rates for longer term with G-Secs

Holding instrument till maturity could help in tackling volatility

A major announcement in Friday’s monetary policy review was that retail investors will now be able to invest in government securities (G-Secs) directly by opening a gilt account with the central bank.

The facility, called ‘Retail Direct’, will provide them online access to both the primary and secondary G-Sec markets. There are, however, a few aspects to factor in before considering G-Secs as an investment option.

Do G-Secs carry credit risk?

This refers to the risk of an issuer defaulting on the payment of interest or return of principal. G-Secs, issued by the Government of India, carry zero credit risk.