Now retail investors will be able to invest directly in Government Bonds. The Reserve Bank of India (RBI) on Monday opened a dedicated bond purchase window for retail investors. It aims to democratize ownership of government debt securities beyond banks and managers of pooled resources such as mutual funds. According to the statement issued by RBI, the date of launch of the scheme will be announced later.
Now retail investors will be able to buy and sell government bonds through RBI’s ‘Retail Direct Gilt (RDG) Account’. According to RBI, retail investors (individuals) will now have the facility to open and maintain RDG accounts with RBI.
How to open account
RDG accounts can be opened through the online portal provided for this scheme i.e. RBI Retail Direct Online Portal. The ‘online portal’ will also provide registered users access to primary issues of Government Securities and access to NDS-OM. RDG account can be opened singly or jointly.
will not charge any fee
RBI will not charge any fee for maintaining RDG account. Using an RDG account, a saver can buy from the primary market, which is hitherto dominated by bond houses or institutional investors. However, retail participation may not drastically change the outlook for the sovereign bond market. This can open up a whole new investment option for savers looking for investment safety and assured returns.
Eligibility conditions
- The retail investor should have a savings account in India.
- Must have pan.
- Any valid document should be for KYC.
- Must have valid email id and registered mobile number.
- A NRI is also eligible provided he/she complies with the Foreign Exchange Management Act.
What will be the procedure
Registration: Investors can register on the online portal by filling up the online form and using the OTP received on the registered mobile number and email ID to authenticate and submit the form. On successful registration a ‘Retail Direct Gilt Account’ will be opened and details will be given through SMS/e-mail to access the online portal. The RDG account will be available for primary market participation as well as secondary market transactions on NDS-OM.
Primary market participation
The participation and allotment of securities shall be as per the non-competitive scheme for participation in the primary auction of Government securities and procedural guidelines for issuance of SGBs. Only one bid is allowed per security. The total amount payable on bid submission will be displayed. Payment to the Aggregator / Recipient Office can be done through Net Banking / UPI. Refund, if any, will be credited to the investor’s bank account as per the time limit specified by the aggregator. The securities allotted to the investors will be issued by depositing them in their RDG account on the day of settlement.
Secondary Market Transaction-NDS-OM
Registered investors can use the secondary market transaction link on the online portal to buy or sell Government securities through NDS-OM (Odd Lot Segment/RFQ).
Purchase:
Before the commencement of trading hours or during the day, the investor should transfer money from the linked bank account to the designated account of CCIL (Clearing Corporation of NDS-OM) using Net-Banking/UPI. Based on the actual transfer/success message, a funding limit (buy limit) will be given for placing ‘buy’ orders. At the end of the trading session, any excess funds lying to the credit of the investor will be returned.
Using the UPI facility, whereby funds in the linked bank account can be blocked at the time of placing an order, the money will be debited from this account on the day of settlement. Similar facility will be made available through banks in due course. The securities purchased will be credited to the RDG account on the day of settlement.
Sales:
The securities identified for sale will be blocked at the time of placing the order until the settlement of the trade. The amount received from the sale transaction will be credited to the linked bank account on the day of settlement.
Other services for investors
The transaction history and balance status of the securities in the Retail Direct Gilt account can be accessed from the link provided. All transaction alerts will be provided through e-mail/SMS.
Nomination facility is available in RBI RDG account. Enrollment form in the prescribed format can be filled and uploaded. There can be a maximum of two nominees. In the event of the death of the registered investor, the securities available in the RDG account can be remitted to the nominee’s RDG account or any other government security account on submission of the death certificate and transmission form.
The securities held in an RDG account can be pledged as and when required.
The ‘Retail Direct Investor’ will have the online facility to gift Government Securities to other Retail Direct Investors.
Any query or complaint related to the ‘Retail Direct’ scheme can be put on the portal, which will be handled/resolved by the Public Debt Office (PDO), Mumbai, RBI.
No fee will be charged by the aggregator for bid submission in the primary auction. Any charges applicable for payment gateway etc. will be borne by the registered investor.
