RBI on WebNotes

Debt mutual fund vs bank fixed deposit (post-2023 tax regime)

Tue, 12 May 2026 00:00:00 +0000

The Finance Act 2023 introduced a fundamental change to the taxation of debt mutual funds in India, effective from 1 April 2023. Prior to this amendment, gains on debt mutual fund units held for more than 36 months were classified as long-term capital gains (LTCG) and taxed at 20% with indexation benefit. From 1 April 2023, gains on specified mutual funds (those with domestic equity exposure of 35% or less) are taxed at the investor’s applicable income tax slab rate irrespective of holding period, under the new Section 50AA of the Income Tax Act, 1961.

Gold ETF vs Sovereign Gold Bond vs Gold mutual fund

Tue, 12 May 2026 00:00:00 +0000

India offers three regulated paper-gold investment instruments: Gold ETFs (exchange-traded funds backed by physical gold), Sovereign Gold Bonds (SGBs) (government-issued bonds denominated in grams of gold), and Gold Mutual Funds (fund-of-fund schemes investing in gold ETFs). Each tracks the domestic price of 24-carat gold but differs in structure, cost, taxation, and liquidity.

Physical gold (jewellery, coins, bars) is excluded from this comparison.

Instrument overview

Gold ETF

A Gold ETF is an exchange-traded fund that holds physical gold (minimum 99.5% purity) as the underlying asset. Each unit of a Gold ETF typically represents 1 gram (or 0.01 gram for some fund-specific units) of gold. Gold ETFs are SEBI-regulated mutual fund schemes listed on NSE and BSE. A demat account is required. AMFI-registered AMCs offering Gold ETFs include Nippon India, HDFC, SBI, Axis, Kotak, UTI, and ICICI Prudential, among others.

How to buy a G-Sec on Zerodha Kite

Tue, 12 May 2026 00:00:00 +0000

This guide walks through buying Government Securities (G-Secs) in the exchange-traded secondary market through Zerodha’s Kite platform. The secondary market route allows retail investors to buy existing G-Secs without participating in a primary RBI auction. For primary auction participation, a separate RBI Retail Direct account is required; that process is covered in How to bid in an RBI primary bond auction via Zerodha.

The encyclopedic overview of G-Secs on Zerodha covers types of government securities, yield mechanics, duration risk, and tax treatment. This article focuses on the step-by-step procedure for the secondary market.

How to buy a Sovereign Gold Bond on the secondary market via Kite

Tue, 12 May 2026 00:00:00 +0000

This guide explains how to buy Sovereign Gold Bonds (SGBs) in the exchange-listed secondary market through Zerodha’s Kite platform. SGBs are government securities denominated in units of one gram of gold, issued by the Government of India under the SGB Scheme administered by the Reserve Bank of India (RBI). Once issued, SGBs are listed on the NSE and BSE and can be bought and sold like listed securities.

Buying in the secondary market offers two advantages over a new primary issue: (a) you can buy at any time, not only during the two-to-three-day subscription windows that RBI opens periodically; and (b) secondary market prices often trade at a discount to the prevailing gold price NAV, allowing entry below the RBI’s official issue price.

How to buy a T-Bill on Zerodha

Tue, 12 May 2026 00:00:00 +0000

This guide explains how to buy Treasury Bills (T-Bills) through Zerodha’s Kite platform. T-Bills are short-duration sovereign instruments issued by the Government of India and managed by the Reserve Bank of India (RBI). They are zero-coupon instruments: there is no periodic interest payment; instead, the government issues them at a discount to face value and redeems them at face value on the maturity date. The difference between the purchase price and Rs 25,000 constitutes the investor’s return.

How to redeem an SGB at maturity

Tue, 12 May 2026 00:00:00 +0000

This guide explains the process of redeeming a Sovereign Gold Bond (SGB) at its 8-year maturity date. SGBs are issued by the Government of India under the SGB Scheme, administered by the Reserve Bank of India (RBI). Each SGB tranche has a fixed tenor of 8 years from its original issue date. At maturity, RBI redeems the bonds at the prevailing gold price and the capital gains arising from the maturity redemption are exempt from capital gains tax for all holders, including secondary market buyers who hold to maturity.

How to redeem an SGB early (5th-year window)

Tue, 12 May 2026 00:00:00 +0000

This guide explains how to exercise the early-exit option for Sovereign Gold Bonds (SGBs) during the RBI’s designated premature redemption windows. The SGB Scheme allows investors to exit their SGB holdings before the 8-year maturity, but only on specific coupon payment dates starting from the 5th year after the original issue date. This is commonly called the “5th-year window” or the premature redemption window.

Early exit is an important option for investors who no longer wish to hold the SGB to maturity or who need liquidity. However, unlike maturity redemption, early-exit proceeds are not exempt from capital gains tax. The tax implications differ significantly from the 8-year maturity route, making it important to understand both options.

How to track G-Sec coupon receipts on Console

Tue, 12 May 2026 00:00:00 +0000

This guide explains how to track coupon payments from Government Securities (G-Secs), Sovereign Gold Bonds (SGBs), and T-Bill maturity proceeds when holding these instruments through Zerodha’s demat account. The single most common point of confusion for new G-Sec investors on Zerodha is that coupon payments do not appear in the Kite portfolio or the Zerodha trading ledger, they are credited directly by the Reserve Bank of India (RBI) to the investor’s primary bank account.

How to trade USDINR futures on Zerodha

Tue, 12 May 2026 00:00:00 +0000

USDINR currency futures on the NSE Currency Derivatives Segment (CDS) are among the most liquid currency contracts in the world by volume. A single lot represents 1,000 USD, making the contract accessible to hedgers with modest foreign-currency exposure as well as to traders seeking to speculate on the rupee-dollar rate. Zerodha provides access to this segment through Kite once the currency segment is activated.

This guide covers the full workflow from activation through to exit, with margin calculations, regulatory context, and common failure points.

International fund of funds vs direct foreign brokerage for overseas investing

Tue, 12 May 2026 00:00:00 +0000

Indian investors seeking exposure to overseas equity markets, primarily US equities (S&P 500, Nasdaq) and international indices, can access them through two primary regulated channels: international mutual fund of funds (FoFs) offered by Indian AMCs, or direct foreign brokerage accounts maintained under the RBI’s Liberalised Remittance Scheme (LRS).

Both channels allow Indian resident individuals to invest in foreign equity markets, but differ substantially in regulatory framework, tax treatment, transaction process, limits, and cost.

Liquid fund vs savings account

Tue, 12 May 2026 00:00:00 +0000

Liquid mutual funds and bank savings accounts are both commonly used for parking short-term cash in India. Liquid funds are debt-oriented mutual fund schemes regulated by the Securities and Exchange Board of India, investing in money market instruments with a maturity of up to 91 days. Bank savings accounts are deposit products regulated by the Reserve Bank of India (RBI), offering a fixed or floating interest rate on balances maintained.

Both instruments provide ready access to funds, but they differ in return potential, insurance coverage, taxation, and minimum balance requirements.

Liquid fund vs sweep-in FD

Tue, 12 May 2026 00:00:00 +0000

A sweep-in fixed deposit (also called an auto-sweep FD or sweep facility) is a product offered by banks in India that automatically converts savings account balances above a specified threshold into short-term fixed deposits, earning the higher FD rate while retaining the liquidity of the savings account. When the account holder initiates a withdrawal or payment that exceeds the savings balance, the linked FD is automatically broken in LIFO or FIFO order to fund the transaction.

SEBI mutual fund overseas investment cap (India)

Tue, 12 May 2026 00:00:00 +0000

The overseas investment cap for Indian mutual funds refers to the aggregate and per-fund limits placed on the amount of foreign assets that Indian mutual fund schemes may hold, set jointly by SEBI under the SEBI (Mutual Funds) Regulations, 1996 and by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), 1999. As of May 2026, the aggregate industry-level cap is USD 7 billion for all overseas securities investments by mutual funds, with an additional separate cap of USD 1 billion for investments in overseas Exchange-Traded Funds (ETFs). The framework is administered by the SEBI Investment Management Department and has been subject to multiple revisions, including a significant suspension and resumption cycle in 2022.

SIP vs recurring deposit (RD)

Tue, 12 May 2026 00:00:00 +0000

A Systematic Investment Plan (SIP) and a Recurring Deposit (RD) are both monthly savings mechanisms that require the investor to commit a fixed amount periodically. A SIP invests in mutual fund units at the prevailing NAV, while an RD is a bank deposit product earning interest at a predetermined rate. The two instruments differ fundamentally in risk profile, return potential, and tax treatment.

Definitions

SIP in a mutual fund

A SIP is an instruction to invest a fixed amount (minimum typically Rs 100-500) at a recurring date in a specified mutual fund scheme. The amount is debited via NACH or UPI AutoPay and invested in units of the scheme at the NAV on the execution date. SIPs are available for equity, debt, hybrid, and other fund categories.

Yes Bank AT1 bond writedown impact on mutual funds

Tue, 12 May 2026 00:00:00 +0000

The Yes Bank AT1 bond writedown of March 2020 was a regulatory action by the Reserve Bank of India under a Yes Bank crisis resolution scheme that reduced the value of approximately Rs 8,415 crore of Yes Bank’s Additional Tier 1 (AT1) bonds to zero. For Indian mutual fund schemes and other institutional investors that held these instruments, the writedown caused immediate, total, and permanent NAV losses on that exposure. The episode raised fundamental questions about the risk classification, disclosure, and distribution of AT1 instruments in Indian markets and prompted the Securities and Exchange Board of India to impose new restrictions on mutual fund holdings of AT1 and Tier 2 bank bonds.

Currency derivatives on Zerodha

Mon, 11 May 2026 00:00:00 +0000

The currency derivatives segment on Zerodha provides access to exchange-traded currency futures and options on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). This segment allows Indian residents to trade standardised contracts on the Indian Rupee (INR) against major foreign currencies. It is distinct from the over-the-counter (OTC) forex market operated by banks and authorised dealers, and is regulated jointly by SEBI and the Reserve Bank of India (RBI).

Currency derivatives in India were introduced in 2008 following a joint working group recommendation by SEBI and RBI. NSE launched USD/INR futures on 29 August 2008; options on USD/INR followed in October 2010.

Fixed deposits on Zerodha (Blostem)

Mon, 11 May 2026 00:00:00 +0000

Zerodha offers fixed deposit (FD) products through Blostem, an affiliated platform that aggregates fixed deposit offerings from multiple banks and Non-Banking Financial Companies (NBFCs). Blostem is accessible from within the Zerodha account ecosystem and allows investors to compare rates across partner institutions and book FDs without visiting a branch.

Blostem operates as a distribution intermediary, not as a bank or NBFC itself. Fixed deposits booked through Blostem are directly with the issuing bank or NBFC; Blostem facilitates the application, documentation, and onboarding process.

G-Sec on Zerodha

Mon, 11 May 2026 00:00:00 +0000

Government Securities (G-Secs) are sovereign debt instruments issued by the Government of India through the Reserve Bank of India (RBI) to finance fiscal deficits. They are considered the safest category of fixed-income instrument in India, carrying zero credit risk as they are backed by the sovereign guarantee of the Government of India. Zerodha provides retail investor access to G-Secs through two routes: exchange-traded secondary market G-Secs via Kite, and a linkage to the RBI’s Retail Direct scheme for primary auction participation.

National Payments Corporation of India (NPCI)

Mon, 11 May 2026 00:00:00 +0000

The National Payments Corporation of India (NPCI) is the umbrella organisation for operating retail payment systems and settlement infrastructure in India. Incorporated in December 2008 under the Companies Act as a not-for-profit company under Section 8, NPCI was promoted jointly by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA). It received formal authorisation from the RBI under the Payment and Settlement Systems Act, 2007 (PSS Act) as a payment system operator, and its schemes are classified as systemically important payment systems.

Non-Resident Indian (NRI)

Mon, 11 May 2026 00:00:00 +0000

A Non-Resident Indian (NRI) is an Indian citizen who is resident outside India as defined under the Foreign Exchange Management Act, 1999 (FEMA). In the context of Indian capital markets, NRI status determines the accounts through which an investor may hold rupee funds and securities in India, the regulatory permissions required to invest in equity, and the repatriation rights on investment proceeds. NRIs occupy a distinctive position in the investor-category framework of the Indian primary market: they are eligible to subscribe to Initial Public Offerings (IPOs) but are subject to exchange-control conditions that differ materially from those applicable to resident Indian investors, including restrictions on the use of UPI ASBA and conditions tied to whether the investment is made on a repatriation or non-repatriation basis.

Reserve Bank of India (RBI)

Mon, 11 May 2026 00:00:00 +0000

The Reserve Bank of India (RBI) is the central bank of India and the apex monetary authority in the country. Established on 1 April 1935 under the Reserve Bank of India Act, 1934, the institution was incorporated as a private joint-stock company but was nationalised on 1 January 1949 under the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. Its central office – where the Governor’s office and the principal executive departments are situated – is in Mumbai, and the institution maintains a network of regional offices, sub-offices, and currency chests across the country.

Sovereign Gold Bonds on Zerodha

Mon, 11 May 2026 00:00:00 +0000

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold. They are issued by the Reserve Bank of India on behalf of the Government of India. SGBs offer investors exposure to gold price returns plus a fixed annual interest of 2.5% per annum on the issue price, without the need to hold physical gold. Zerodha provides access to SGB subscriptions during primary issue windows and to secondary market SGB trading through Kite.

T-Bills on Zerodha

Mon, 11 May 2026 00:00:00 +0000

Treasury Bills (T-Bills) are short-term Government Securities issued by the Government of India through the Reserve Bank of India (RBI) with maturities of 91 days, 182 days, and 364 days. They are zero-coupon instruments: issued at a discount to face value and redeemed at face value (Rs 100 per unit) at maturity. The discount represents the investor’s return. T-Bills carry sovereign guarantee and zero credit risk. Zerodha provides access to T-Bills through the exchange-traded debt market on Kite and directs investors to the RBI Retail Direct portal for primary auction participation.

Zerodha NRI account (PIS)

Mon, 11 May 2026 00:00:00 +0000

Zerodha NRI account (PIS) is a trading and demat account offered by Zerodha to non-resident Indians (NRIs) and Overseas Citizens of India (OCI) cardholders who wish to invest in Indian equity markets through the Portfolio Investment Scheme (PIS). The PIS is a channel authorised by the Reserve Bank of India under the Foreign Exchange Management Act, 1999 (FEMA), specifically under the FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (as notified through various RBI master directions). Investments made through the PIS route from a Non-Resident External (NRE) bank account are fully repatriable, while those from a Non-Resident Ordinary (NRO) account are repatriable within RBI-prescribed limits.