Bonds refer to the statements of debt. It is a promise to repay money borrowed after a particular period of time with certain rate of interest. The issuer is equivalent to the borrower and the bond holder to the lender. Bonds enable the issuer to finance long-term investments with external funds.
Government bonds refer to the bonds issued by the Government or the government department of a country in its own currency. The money raised from the bonds maybe used to finance various activities like building roads, hospitals, infrastructure etc.
RBI bonds refer to the bonds issued by Reserve Bank of India. The money raised may be used to finance its various projects like long term lending, development of the economy etc.
Investing in bonds is different from investing in shares. The bonds are traded more on over the counter basis than on the stock market. Usually the Govt and RBI bonds are available in designated branches of banks and post offices. They may be procured to a broker too. You will have to fill in a form and apply for the bonds. Usually one bond is worth 1000 rupees and if you want to invest above 50,000.00 you will have to submit a PAN card. Once you fill the form and submit it you will receive a bond certificate in your name.
The returns depend on the type of the bond! Some have a fixed rate of interest, say 8%, and some are linked to the market or the inflation in the country. That means the interest maybe 4% plus the fluctuations to the parameter to which it is linked. The returns maybe paid out to you in the form of a demand draft or maybe a direct credit to your bank account.