In February this year, the Reserve Bank of India (RBI) had said that it would allow retail investors to directly buy and sell government securities (G-Secs) on its platform. Through RBI’s Retail Direct scheme, an investor would be able to bid in G-Secs auctions and buy them in the secondary market as well.
On Monday, the central bank issued details of the scheme. According to the notification, retail investors will need to open and maintain a Retail Direct Gilt Account (RDG Account) with RBI to access its G-Sec platform.
No fee will be charged for opening and maintaining The RDG Account.
Investors can open the account through an online portal (RBI Retail Direct portal) meant for retail investors. RBI is yet to give details of the portal.
Using the portal, Retail investors can access the auctions and the NDS-OM platform — the RBI platform for buying and selling G-Secs and other money market instruments in the secondary market.
RBI is yet to launch the scheme. According to the notification, “the date of commencement of the scheme will be announced at a later date”.
SECURITIES AVAILABLE FOR TRADE
Once the scheme is launched, retail investors can buy and sell Treasury Bills, G-Secs, Sovereign Gold Bonds and State Development Loans.
To open an RDG Account, a retail investor should have a savings bank account, PAN (Permanent Account Number), KYC (Know Your Customer) documents, a valid email address and a mobile number. The RDG account can be held either by one person or jointly.
Only those non-residents retail investors eligible to invest in G-Secs will be allowed to open the RDG Account.
After registering on the online portal, retail investors will need to authenticate themselves by using OTP (one-time password) received on their registered mobile number and email address. They will need to submit the KYC document to open the RDG Account.
BUYING AND SELLING
During the bidding, the participation and allotment of securities will be as per the non-competitive bidding scheme of the RBI. The regulator has designed the non-competitive bidding scheme for non-institutional small buyers.
Once investors make the payments, RBI will credit the securities to their RDG Accounts.
To buy and sell securities in the secondary market, the procedure is similar to buying and selling of shares.
Before the start of trading hours or during the day, the investor must transfer funds to the designated account of CCIL (Clearing corporation of NDS-OM) online.
Based on actual transfer, a funding limit (buying limit) will be given to the investor for placing ‘buy’ orders. At the end of the trading session, any excess funds will be refunded.
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