Key Points:
- On Friday, the Reserve Bank of India said that the retail investors in India will be given online access to invest in government securities.
- RBI Governor, Shaktikanta Das said, “World over very few countries like the US and Brazil have done it. In Asia, we are the first to do it.”
- “… you and I can directly place the bid. To operationalise this, individuals will be allowed to open gilt accounts in the RBI’s e-kuber system,” said RBI Deputy Governor B P Kanungo.
On Friday, the Reserve Bank of India said that the retail investors in India will be given online access to invest in government securities. Small investors who do not like the risk of stock markets will have a new platform — dubbed Retail Direct — just like the trading platforms for stocks, which will be directly under the central bank. Currently there is a way for small investors to buy government bonds via the goBID platform on the National Stock Exchange (NSE).
“We have this aggregator model through stock exchanges but now we’re giving retail investors direct access,” said RBI governor Shaktikanta Das during the press conference.
What are Government Securities (G-secs)?
G-secs are debt instruments issued by the government and considered the safest form of investment.
RBI Governor Shaktikanta Das hailed this as a “major structural reform.” He said, “World over very few countries like the US and Brazil have done it. In Asia, we are the first to do it.” “As part of continuing efforts to increase retail participation in government securities and to improve ease of access, it has been decided to move beyond aggregator model and provide retail investors online access to the government securities market,” added the RBI.
“Now, going forward, you and I can directly place the bid. To operationalise this, individuals will be allowed to open gilt accounts in the RBI’s e-kuber system. The RBI will come out with the details very soon,” said RBI Deputy Governor B P Kanungo.
Until now, only institutional investors were allowed to bid directly for government bonds, although retail investors are allowed to buy them through stock exchanges.
“This is a major structural reform. I am saying so because the world over only a few countries, like the US and Brazil, offer this facility. In Asia, we are the first country to do it,” RBI governor Shaktikanta Das told reporters a press conference.
Allowing retail investors to invest in sovereign debt will broaden the investor base and help absorb the government’s ₹12 lakh crore borrowing plan to fund higher healthcare and infrastructure spending.
