InvestorQ : What is the difference between G-sec, government bonds, and treasury bills?
swati Bakhda made post

What is the difference between G-sec, government bonds, and treasury bills?

Priyanka N answered.
1 year ago

G-secs means Government Securities and the term is used collectively for treasury bills and government bonds. Basically, government securities with maturities less than 1 year are called T-bills and those above 1 year are called government bonds.

T-bills do not carry any interest portion and are generally issued at a discount to their PAR value. Upon expiry, they are redeemed at their true value. T-bills can be available in three different maturity variants, they are 91 days, 182 days, and 364 days.

*Government security is a tradeable instrument issued by the Central Government or the State Government that acknowledges the Government’s debt obligation.
What is better?

Treasury bills mature within a period and hence returns on these instruments are not very attractive. Especially when one is looking for an option with a high return and lower risk.

Government bonds mature in a period of 10 years and offer interest bi-annually which makes it an attractive investment option. The best part about government securities is that they carry less risk.

If you want to park your money in a risk-free instrument for the short-term, T-bills could be one of the best investment options. However, if you are looking to invest for a longer period, you should go for government bonds, as they have higher returns which comes with minimum risk.