Retail Direct Scheme Unveiled by RBI

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Retail Direct Scheme Unveiled by RBI

The Reserve Bank of India (RBI) unveiled the ‘Retail Direct Scheme’ under Government Securities (G-secs).

  • Retail Direct Scheme is a one-stop solution to facilitate investment in Government securities by individual investors.
  • Earlier, small investors could invest indirectly in government securities by purchasing mutual funds or through certain policies issued by life insurance establishments.

Salient Features of the Scheme

  • Retail investors (individuals) will have the facility to open and maintain ‘Retail Direct Gilt Account’ (RDG Account) with RBI.
  • Primary issue of Government securities and access to Negotiated Dealing System Order Matching (NDS-OM).
  • NDS-OM is an anonymous electronic order matching system for trading government securities in the secondary market.

Need for this plan

  • The government securities market is dominated by institutional investors like banks, mutual funds, etc., which leave less liquidity left in the secondary market for small investors.
  • Earlier the National Stock Exchange (NSE) GoBid App or Retail Debt Market in the exchange. Efforts to popularize G-sec among retail investors like (RDM) segment did not yield the desired results.
  • This scheme will help in broadening the investor base.

What is G-secs?

These are debt instruments issued by the government to borrow money. There are two major categories of these:

  • Treasury bills: Short duration instruments, which mature in 91 days, 182 days or 364 days; and
  • Dated securities: Long term instruments, which mature any time between 5 years to 40 years.

Source – The Hindu

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