The Retail Direct Scheme is a government securities market participation scheme launched by the RBI for allowing retail investors to directly invest in government securities. The scheme is an innovative one as retail investors had only limited options to directly invest in government securities. Their participation in g-secs is very low. The RBI-RD allows both primary market and secondary market participation for retail investors.

1. What is Retail Direct Scheme?

The Retail Direct Scheme is a investment scheme to facilitate investment including direct investment in Government Securities by individual investors. Retail investors should start a Retail Direct Gilt (RDG) account, for buying and selling government securities through the online portal. Usually, gilt accounts help the investors (like primary dealers) to deal in government securities. Now a similar gilt account can be started by retail investors as well. According to the RBI, Scheme provides a safe, simple, direct and secured platform to retail investors.

Retail investors, can register under the Scheme and maintain a RDG Account, if they have the following:

i) Rupee savings bank account maintained in India;

ii) PAN

iii) Any officially valid document for KYC purpose;

iv) Valid email id; and

v) Registered mobile number.

2. What are the objective of the scheme?

Firstly, the participation of the retail investors in the g-sec market is low and the RBI-Retail Direct Scheme will enhance their participation in the g-sec market. Secondly, the government is going to sell huge size of securities to finance its fiscal deficit. Enlarging the volume of participants will help the government to reduce the yield (interest cost to be given) of g-secs. This will ease the government’s borrowing programme.

3. Who is a retail investor?

For the scheme, retail investor is defined as individuals (natural persons). On the other hand, under the conventional retail investor classification of the SEBI, retail investors are defined as those individuals who are investing less than Rs 2 lakh in any listed company.

4. What is RDG account?

Under the scheme, retail investors can open a Retail Direct Gilt (RDG) which is basically a Gilt Securities Account with the RBI.

Opening an RDG account will allow individuals to buy Government securities directly in the primary market (auctions) as well as buy/sell in the secondary market.

5. Which G-Secs can be bought by the retail investors?

The following Government securities can be bought by the retail investors under the scheme.

  1. Government of India Treasury Bills;
  2. Government of India dated securities;
  3. State Development Loans (SDLs)
  4. Sovereign Gold Bonds (SGB);

6. Which are the two-investment modes for retail investors?

As per the Retail Direct Scheme, retail investors can make their investments using the following two routes:

  1. Primary issue of G-Secs: Here, the retail investors can place their demand/bid as per the non-competitive scheme for participation in primary auction of government securities and for SGB issuance. Primary market is the route where the securities are sold directly to the investor.
  2. Secondary market: Here, retail investors can buy and sell government securities on NDS-OM (Negotiated Dealing System which is a platform for secondary buying and sale of g-secs).

7. How trade can be conducted by the retail investors

The main condition is the starting of the RDG account. Investors can engage in both the primary issue market and the secondary market for g-secs. For this, the ‘Online portal’ for the registered retail investors will give the following facilities:

  1. Access to primary issuance of Government securities
  2. Access to NDS-OM (the secondary trade platform for G-Secs).

A unique feature of the scheme is that payments for transactions can be done by using saving bank account through internet-banking or UPI.

8. Minimum and maximum amount for investment.

The minimum and maximum amount for investment is indicated in the following box.

G-Sec Minimum Maximum
GoI Treasury Bills Rs 10000 Maximum of 5% of the aggregate nominal amount of the issue.
GoI Dated securities Rs 10000 Rs 2 crore
State Development Loans Rs 10000 1% of the notified auction amount.
Sovereign Gold Bonds One gram of gold 4 kg of SGBs/fiscal year.

The RBI Retail Direct Scheme was launched by the Honourable PM Narendra Modi on 12th November 2021.

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