1. You have to sign the bond because you will undergo training at the Zonal Training School (ZTS) for around nine and a half months. The Railway will pay you Basic Pay and Dearness Allowance (DA) during the training period. After the training at ZTS, you will undergo 'line training' and 'station training' for another one month. You will receive the salary during that period also. As you will undergo training and will receive the salary, you have to sign a bond that you will serve the Railway for at least five years after completion of training.
2. Now, the next question is: Can't you apply for any other post? Yes, you can apply for other posts. Yes, you can apply. If you apply through proper channel for any other Government post, get selected and join that post, the bond will be automatically transferred for the residual period. What does it mean? If you join in any other Central Government post after say 2 years, the bond will be transferred to that department for three (5-2) years, i.e., you have to serve the new office under the Government of India for at least three years.
3. This is from my personal experience. In my case also, I joined a new Central Government post after one and a half years of service in Eastern Railway. So, my bond got transferred to the new Department for three and a half years.
4. However, please remember that you are required to apply through proper channel with an advance copy sent to the recruiting agency, to avail this benefit of bond transfer.
Beware! I question everything and everybody.