G-secs: A decent investment option provided you hold till maturity

The flip side is that while they shield you from credit risk, they aren't tax-efficient and are prone to interest-rate volatility

In the aftermath of the IL&FS fiasco, investors have become highly wary of credit risk. Many of them are thinking of investing in government securities (G-Secs), which eliminate credit risk altogether. These instruments do, however, carry other risks investors should be aware of. 

Modus operandi of purchasing G-Secs

Six months ago, NSE and BSE launched platforms to enable retail investors to participate in the non-competitive bidding section of G-Sec auctions. These auctions take place on Fridays, while those for treasury bills are held on Wednesdays. Five per cent of these auctions are reserved for non-competitive bidding that retail investors can participate in. 

Investors