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