RBI Retail Direct – Invest in Government Bonds online

RBI Retail Direct – Invest in Government Bonds online 2021

We can now invest in government bonds online using the RBI retail direct platform. In February 2021, the RBI announced that it would allow retail investors to directly buy and sell government bonds online. Now through RBI retail direct scheme, we can invest in government bonds online.

On July 20, 2021, the RBI issued a notification in this regard. According to the notification, retail investors will have to open and maintain a Retail Direct Gilt Account (RDG Account) with the RBI to access the G-Sec platform. We can open an account through an online portal (RBI Retail Direct Portal) meant for retail investors. However, the RBI has not yet disclosed the details of the RBI Retail Direct portal.

The launch date of the portal has not been fixed yet. "The project start date will be announced later," the statement said.

RBI Retail Direct – Invest in Government Bonds online 2021
RBI Retail Direct 

RBI Retail Direct - Invest in online government bonds

Once the scheme is launched, retail investors will be able to buy and sell Government of India Treasury Bills, Government of India Securities, Sovereign Gold Bonds (SGBs) and State Development Ans (SDLs).

RBI Retail Direct-Features, Qualifications and Procedures

Scope - 'RBI Retail Direct' is a comprehensive scheme that provides access to the initial issue of government securities such as opening and maintaining a 'Retail Direct Gilt Account' (RDG account) and access to retail investors through NDS-OM's online market. .

Eligibility - 

Retail investors will be able to register under the scheme and maintain RDG account as defined under the scheme - PAN card, any OVD for KYC purpose, email ID and registered mobile number. NRI retail investors eligible to invest in government securities under the Foreign Exchange Management Act, 1999 are eligible under this scheme. The RDG account can be opened individually or jointly with any other retail investor who meets the eligibility criteria.

Procedure - 

The procedure for opening and managing RBI retail directly is given below.

Investors will be able to register by filling up the form online on the online portal and use the OTPT form received in the registered mobile number and email id for authentication and submission.

The guidelines given under RBI-Know Your Customer (KYC) Guidelines, 201 under which are updated from time to time, will be followed by investors at the time of operation. Upon successful registration, a 'Retail Direct Gilt Account' will be opened and access to the online portal will be informed via SMS / e-mail.

In addition to participating in the primary market, RDG accounts will be available on NDS-OM for secondary market transactions.

In the primary market, the SGB will issue procedural guidelines for participation in the initial auction of securities and the securities partnership will be in accordance with the non-competitive scheme. 

Only one bid per security is allowed. After submitting the bid, the total amount payable will be displayed. Payment can be made either through the Paying to the Founder / Receiver Offices - a) Using Net-Banking / UPI facility from the linked bank account, through which the bid will be submitted through the fund at the time of submission to the portal. B) Utilizes the UPI facility, through which payments to linked bank accounts can be blocked at the time of submission of bids on the portal which will be debited from this account in case of successful allotment at auction. 

Similar facilities will be made available through banks in due course. Refunds, if any, will be credited to the investor's bank account as per the deadline set by the consolidator. On the day of settlement, the securities will be issued to the investors through credit to their RDG account.

Investors registered in the secondary market can access the link of secondary market transactions on the online portal to buy or sell government securities through NDS-OM (Odd Lot Division / RFQ). To purchase, payments can be made both by a-a) Before the commencement of trading or during the day the investor has to transfer funds from the link to the designated account of CCIL (Clearing Corporation of NDS-OM) using Net-Banking / UPI Bank account. Based on the actual transfer/success message, there will be a funding limit (purchase limit) for placing a ‘Buy’ order. 

At the end of the trading session, any additional funds held by the investor will be refunded. B) Utilizes UPI facility to block funds in linked bank accounts at the time of order which will be debited from this account on the day of settlement. Similar facilities will be made available through banks in due course. Purchased securities will be credited to the RDG account on the day of settlement. For sale, securities identified for sale will remain blocked at the time of ordering until the business is settled. Funds for the sale transaction will be credited to the linked bank account on the day of settlement.

Investor Services - 

Transaction History and Balance of Security Holdings in Retail Direct Gilt Accounts Account details can be downloaded from the link provided on the website. All transaction alerts will be provided via email / SMS.

Nomination - 

The nominated form can be duly filled and uploaded in the prescribed format. There can be a maximum of two nominated candidates. In case of death of the registered investor, the securities received in the RDG account may be transferred to the nominee's RDG account or any other government security account at the time of submission of death certificate and transition form.

Promise / Lien - 

Securities in RDG account will be available for pledge / lien.

Grievance Redressal - 

Any queries or grievances related to the 'Retail Direct' scheme can be raised on the portal which will be handled / resolved by the Public Office (PDO) Mumbai, RBI.

Fees and Charges - 

No fee will be charged for opening and maintaining a 'Retail Direct Gilt Account' with RBI. No fee will be charged by the aggregator for submitting bids in the initial auction. Fees for payment gateways etc. will be borne by the registered investors as applicable.

Conclusion: -

I think this is one of the best opportunities for retail investors. One thing to keep in mind, however, is that although such national securities may not have defaults or downgrades, they are highly sensitive to interest rate movements based on the time horizon of bond maturation.

So, investing in such national securities does not mean that they are safe. If you buy today and try to sell tomorrow (before maturity), there will be a risk of interest rate fluctuations. However, if your idea holds up until it matures, there will be no problem. Keep in mind that investing in a bank fixed deposit is different from investing in government agencies. You can understand how the features fluctuate based on your needs

Next Post »