What is RBI Retail Direct Scheme?

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How to invest/ trade in Government Securities (G’sec) directly?

by Rajeev Pathak



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If you invest or trade in Government securities (G-sec), then there is good news for you. Now onwards, you need not go to any brokers, intermediaries, or banks to invest in such instruments. Instead, you can invest/ trade directly with the Reserve Bank of India (RBI) from the comfort of your home. In this post, we will learn, about RBI Retail Direct Scheme. We will also learn how to invest/trade in Government Securities directly.

What is RBI Retail Direct Scheme?

Reserve Bank of India (RBI) had announced RBI Retail Direct Scheme on 12th July 2021. To implement the scheme, a new web portal, rbiretaildirect.org.in  has been launched by PM Shri Narendra Modi on 12th November 2021. This portal is maintained by the Clearing Corporation of India (CCIL) on behalf of the Reserve Bank of India (RBI).

With this launch, a great facility has been provided to eligible Individual retail investors. They can now invest/ trade in G-secs by opening a Retail Direct Gilt (RDG) Account with RBI.

What is a Gilt?

The term ‘Gilt’ is mainly used mainly for Bonds issued by a government. It is a type of investment that provides a little bit more returns than traditional instruments like bank or post office deposits.  At the same time, it is a little less risky than to invest in the share market. 

What are the instruments available in the RDG Account?

The online portal has been enabled to invest/ trade in the following G-sec.

·      Government of India Treasury Bills;

·      Government of India dated securities;

·      SovereignGold Bonds  (SGBs); and

·      State Development Loans (SDLs).

Who can open a Retail Direct Gilt  (RDG) Account?

·         Any individual(s) who have a Permanent Account Number (PAN) issued by the Income Tax Department in India;

·      Joint Accounts are permitted;

·      The person(s) should have OVD (Officially Valid Documents) to complete the KYC process;

·      Non- Resident Indians (NRIs) can also register themselves on this portal to invest in eligible government securities;

·      The person/persons should have a rupee savings bank account in India;

·      The said bank account must have a Net Banking/ UPI facility;

·      They also need to have a valid email ID; and

·      The Registered Mobile Number (RMN) with their bank account. 


What are the Benefits of RBI Retail Direct Accounts?

·      Prospective retail investors can invest/ trade directly without any intervention of  a bank/ intermediary;

·      Retail investors can open and transact online from the comfort of their home without any paperwork;

·      They can invest in Treasury Bills, Government Bonds including Sovereign Gold Bonds directly when an Issue is opened for subscription in the Primary market;

·      They can also transact in secondary markets;

·      They can gift Bonds to their near and dear ones; and

·      The payment of interest and closure proceeds will be made to their bank accounts automatically; and

·      The Bonds can be pledged/ charged to a lending institution through the portal.

What is Primary Market?

Primary market participation is like applying to an IPO (Initial Public Offer) in the share market. An investor has to bid for a specific quantity at a pre-determined rate. The most popular example is Sovereign Gold Bond. An investor can make only one application for the required quantity.

What are Secondary Market transactions?

An investor can do online buy/ sell transactions for the Government securities on the portal. He/she can also do transactions where no financial consideration is involved.

How to open an RBI Retail Direct Gilt Account (RDG)?

 To invest in Government securities directly one should visit the RBI Retail Portal,                     

      ·     The procedure to register on the above website is very easy and simple.

·     The only thing needed is to keep all required information/documents ready.  

·     Information needed is the Full Name of the investor(s), Bank Account details, KYC documents details, PAN number, Residential Address, Email ID and Registered Mobile Number, etc.

·     One should also keep ready the details of his/her nominee as it is mandatory for opening the Retail Direct Gilt Account (RDG).

·     Please take care to furnish KYC details to both holders in case of Joint Accounts.

After registration, a tracking number is allotted. You can track the status of your application through this number on the portal.

After KYC verification and bank account validation, the account is opened and you are informed through email/SMS.

What are other facilities available on the portal?

Nomination: 

As described above, it is mandatory to make a nomination in the Retail Direct Gilt Account. This facility is available online on the portal.

Account Statement:

An investor can generate/download his/her statement of holdings.

Pledging/Lien marking:

An investor can also Pledge his holdings in the account to a lender online.

Gift facility:

An investor can also gift security through the online facility. For this, it will be necessary to open an account for the person who is going to get the Gift.

Are there any Service Charges?

At present, there are no Service Charges levied by the RBI for opening or transacting on the web portal.

Conclusion:

I am of the view the launch of the RBI Retail Direct Scheme has opened a new avenue of investment in Government Securities for small investors.  Till now investment in G-sec was considered to be a domain meant for big corporates, banks, and mutual funds. 

I have made an attempt to explain the RBI Retail Direct Scheme in simple words. We have also learned, how to invest/ trade in Government Securities (G’sec) directly.  

If you like this post, please share it with others. We will welcome your feedback and suggestions in the Comments column.

Contact: boirajeev@gmail.com

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