Where to Buy PSU Bonds in India?
Posted: Mar 05, 2022
Despite market volatility, experts believe that the outlook of public sector undertakings (PSUs) bonds is compelling.
Usually, PSU bonds provide a return of 8% to 9%.
Bonds are a significant part of the public sector's budget. Bonds are defined as securities that pay a fixed interest to the investors.
When public sector undertakings create debt, it is called public sector undertakings bonds.
A public sector undertaking (PSU) in India is an entity (in the form of companies or public banks) in which the central or state government has a majority stake (more than 51%).
The money raised by PSU bonds is used to finance projects such as infrastructure projects, railways projects, etc., undertaken by the company.
How to invest in PSU bonds in India?
If individuals want to buy public sector bonds in India, they can choose any one of the platforms:
Investors can buy PSU bonds on any bank's website authorised to sell PSU bonds. They will have to open a trading and Demat account with the bank.
2. Online platforms
If investors wish to participate in PSU bonds India, they can trade on online platforms. Numerous online platforms are available in the market. One such online platform is BondsIndia.
3. NSE and BSE apps
Investors can also purchase PSU bonds in India through the mobile app or a web platform of NSE (National Stock Exchange) or BSE (Bombay Stock Exchange).
The NSE app is known as "NSE goBID ", and the BSE app is known as BSE Direct.
4. Mutual funds
One of the well-known ways of investing in PSU bonds is mutual funds.
In India, banking & PSU debt funds are available to investors if they wish to invest in PSU bonds.
These funds invest in debt instruments issued by PSUs, banks, and public financial institutions (PFI).
Benefits of investing in PSU bonds
PSU provides a lot of advantages, some of them are:
The main benefit of PSU bonds is that they are backed by the faith and credit of the government. This means that in case of a default by the PSU, the government might step in and honour the debt. Thus, PSU bonds carry low default risk, making them a safe investment.
Another vital benefit of PSU bonds is that they offer a higher interest rate than fixed deposits, savings accounts, government bonds, etc., which provides investors with an opportunity to earn higher returns.
The public sector undertaking bonds are an essential part of the Indian economy. They allow the government to raise money for crucial projects, offering investors a stable way to grow their money.
However, the prices of PSU bonds may be more volatile than those of private-sector debt securities, as they are more susceptible to political and economic factors. They also tend to provide lower returns than those offered on private-sector debt securities. This is because the risk of default is lower for government-issued bonds.
Additionally, investors are recommended to know that the maturity date for PSU bonds can be quite long. This means that the investor may not be able to access their money until the bond matures.
Thus, it is advised that investors always evaluate the credit rating of the bonds and do their research before buying PSU bonds.
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