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The money market is the component of the financial markets where short-term debt instruments with high liquidity are traded. The financial institutions such as commercial banks, NBFCs, primary dealers arrange short-term advances from the money market.
The financial systems of a country comprised of four different types of financial markets viz Money Market, Capital Market, Commodity Market and Forex Market. Each market deals with separate financial instruments and fulfil different types of credit requirements of businesses.
The corporates or government meet their short term or long term needs of funds by raising funds from the general public through these financial markets.
The Government of India approaches to the financial market to raise funds from the general public by selling different types of government securities. Treasury bills (T-Bills) are one of the instruments which are used for short term requirement of funds. The Government also raises funds from the market for a longer duration (up to 40 years) by using other instruments like Dated Security (Government Bonds) depending on the requirement of money.
Thus Government utilise different instruments to raise funds from the financial market.
There are various infrastructure projects, construction and development projects, Government schemes and various free scheme are performing across the country.
There are several infrastructure projects, activities, government schemes which are running across the country. Hence the Government of India or State Government issue the government securities to fulfil such excess requirements of funds and recover the deficit or mismatch of cash flow occurred.
Before we discuss types of Government Securities in India, we must know what does it mean by Government Securities?
Hence, let’s understand the meaning and definition of Government Securities.