Portal for buying and selling of government security Can be seen at rbirtaildirect.org.in
Here’s what you need to know about the scheme and how you can invest in government securities.
What is RBI Retail Direct Scheme?
RBI Retail Direct Scheme allows retail investors to buy and sell government securities (G-Secs) online in both primary and secondary markets. As per the details provided by RBI, these small investors can now invest in government securities by opening a Gilt Securities account with RBI. The account opened will be called as Retail Direct Gilt (RDG) Account.
Who can open an RDG account?
As per the notification issued by RBI on July 12, 2021, a retail investor can open an RDG account if he has the following:
- Rupee Savings Bank Account maintained in India;
- PAN issued by the Income Tax Department;
- Any officially valid document for KYC purpose such as Aadhar, Voter ID;
- valid email id; And
- registered mobile number
RDG account can be opened singly or jointly with any other retail investor who fulfills the eligibility criteria.
How to register on online portal
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 the information. 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.
Buying and selling of government securities through online portal
Once the account is opened, retail investors can buy government securities in the primary market, where government bonds are issued for the first time, or buy/sell existing government bonds in the secondary market.
Purchase of Government Securities in the Primary Market: The participation and allotment of securities shall be in accordance with the non-competitive scheme for participation in the primary auction of Government securities and procedural guidelines for issuance of Government bonds. Only one bid is allowed per security. On submission of the bid, the total amount payable will be displayed. The payment to the aggregator/recipient office can be made from the linked bank account using net-banking/UPI facility, from which the amount will be debited at the time of submission of bids on the portal.
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Retail investors can also use the ASBA facility, where funds can be blocked in the linked bank account while submitting bids on the portal, which will be debited from this account on successful allotment in the auction. Similar facility will also be made available through banks in the coming time. 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 crediting their RDG account on the day of settlement.
Buying and Selling of Government Bonds in the Secondary Market: Registered investors can use the secondary market transaction link on the online portal to buy or sell Government securities through NDS-OM.
To buy Government Bonds, payment can be made in any of the following modes: Banking/UPI from net-linked bank account to the investor, before the commencement of trading hours or during the day. Based on the actual transfer/success message, a fund 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. Another method is using the UPI facility, whereby funds in the linked bank account can be blocked at the time of placing the order which will be debited from this account on the day of settlement. Similar facility will also be made available through banks in the coming time.
The securities purchased will be credited to the RDG account on the day of settlement.
For the sale of Government Bonds, the securities identified for sale will be blocked at the time of placing the order until the settlement of the trade. The money from the sale transaction will be credited to the linked bank account on the day of settlement.
Fees for opening an RDG account
As per RBI, no fee will be charged for opening and maintaining ‘Retail Direct Gilt Account’. Further, no fee will be charged by the aggregator for bid submission in the primary auction. However, any payment gateway charges will be borne by the registered investor, as applicable.
Other Investor Services
- The online portal will provide an account statement showing the transaction history and balance position of securities holding in the Retail Direct Gilts account. All transaction alerts will be provided through e-mail/SMS.
- A nomination facility will also be provided to the registered user. There can be a maximum of two nominees. In the event of death of the registered investor, the securities available in the RDG account can be remitted to the RDG account or any other Government securities account of the nominee on submission of death certificate and transmission form.
- A retail investor can take a loan against the securities available in the RDG account.
- Retail investors will have the facility to gift government securities to other retail investors.
- Any query or complaint related to the scheme can be raised on the portal which will be handled/resolved by Public Debt Office (PDO), Mumbai, RBI.
“The Retail Direct Scheme offered by RBI is a good opportunity for retail investors to invest in Government Securities, Sovereign Bonds etc. This is the first time in India that retail investors have access to a simple and direct channel for investment in Government securities. The alternative would be. Government securities offer less risk and lower return on investment as compared to investment in equity or property. We recommend that retail investors should diversify their investments and for this benefit to get better and safer returns should be known,” said Dr Ravi Singh, Head of Research and Vice President, ShareIndia.