RBI’s Retail Direct Scheme:
The Prime Minister has launched the Reserve Bank of India (RBI)- Retail Direct Scheme to open up the Government bond market for the retail investors.
- In February 2021, RBI proposed to allow retail investors to open gilt accounts with the central bank to invest in Government securities (G-secs) directly.
- Under the scheme, retail investors (individuals) will have the facility to open and maintain the ‘Retail Direct Gilt Account’ (RDG Account) with the RBI.
- Retail Investor is a non-professional investor who buys and sells securities or funds that contain a basket of securities such as mutual funds and Exchange Traded Funds (ETFs).
- A Gilt Account can be compared with a bank account, except that the account is debited or credited with treasury bills or government securities instead of money.
- The scheme places India in a list of select few countries offering such a facility.
- The move is aimed at diversifying the government securities market, which is dominated by institutional investors such as banks, insurance companies, mutual funds and others.
- While foreign portfolio investors were allowed to invest in G-secs, their holding is around 2-3% in the overall market.
- It offers a portal avenue to invest in Central government securities, treasury bills, State development loans and sovereign gold bonds.
- They can invest in primary as well as secondary market government securities markets.
Negotiated Dealing System-Order Matching Segment (NDS-OM) means RBI’s screen based, anonymous electronic order matching system for trading in Government securities in the secondary market.