Factors Affecting Yield Curve in India

The Government securities comprise dated securities issued by the Government of India and state governments as also, treasury bills issued by the Government of India. The first ever government bond was issued by the Bank of England in 1693 to raise money to fund a war against France. It was in the form of a tontine. Later, governments in Europe started issuing perpetual bonds (bonds with no maturity date) to fund wars and other government spending. The use of perpetual bonds ceased in the 20th century, and currently governments issue bonds of limited duration. Reserve Bank of India manages and services these securities through its public debt offices located in various places as an agent of the Government. Government securities, also called the gilt edged securities or G-sec, are not only free from default risk but also provide reasonable returns and, therefore, offer the most suitable investment opportunity to provident funds.