THE INDIAN DEBT MARKET Debt market refers to the financial market where investors buy and sell

debt securities,mostly in the form of bonds. These markets are important source of funds, especially in adeveloping economy like India. India debt market is one of the largest in Asia. Like all other countries, debt market in India is also considered a useful substitute to banking channels for finance.The debt market is much more popular than the equity markets in most parts of the world. InIndia the reverse has been true. Nevertheless, the Indian debt market has transformed itself into a much more vibrant trading field for debt instruments from the rudimentary marketabout a decade ago.The most distinguishing feature of the debt instruments of Indian debt market is that thereturn is fixed. This means, returns are almost risk-free. This fixed return on the bond is oftentermed as the 'coupon rate' or the 'interest rate'. Therefore, the buyer (of bond) is giving theseller a loan at a fixed interest rate, which equals to the coupon rate.Indian debt market can be classified into two categories: Government Securities Market (G-Sec Market): It consists of central and stategovernment securities. It means that, loans are being taken by the central and stategovernment. It is also the most dominant category in the India debt market. Bond Market: It consists of Financial Institutions bonds, Corporate bonds and debenturesand Public Sector Units bonds. These bonds are issued to meet financial requirements at afixed cost and hence remove uncertainty in financial costs. ADVANTAGES: The biggest advantage of investing in Indian debt market is its assured returns. The returnsthat the market offer is almost risk-free (though there is always certain amount of risks,however the trend says that return is almost assured). Safer are the government securities. Onthe other hand, there are certain amounts of risks in the corporate, FI and PSU debtinstruments. However, investors can take help from the credit rating agencies which ratethose debt instruments. The interest in the instruments may vary depending upon the ratings.Another advantage of investing in India debt market is its high liquidity. Banks offer easyloans to the investors against government securities.