The Buyt Desk
You can now directly invest in government security bonds through the Reserve Bank of India’s Retail Direct Scheme. This move is considered a landmark decision in the Government securities (G-Sec) market as the progress will simplify the investment process and bring G-secs within the people’s reach. Choice of investment in the Government Securities was limited only through traditional insurance plans or gilt mutual funds. But with the retail direct scheme, it will become very easy for a retail investor to invest his/her money in the government securities directly.
To take advantage of this scheme, the retail investors will have to open a retail direct gilt (RDG) account with the RBI. The investors can open the account by visiting the portal of RBI retail direct here– https://rbiretaildirect.org.in
How Can You Start You Investing In Reserve Bank of India’s Retail Direct Scheme?
-
Open a Retail Direct Gilt Account through the online portal.
-
The online portal provides the following facility to registered users: Access to NDS-OM and access to primary issuance of Government securities.
-
Retail investors will have the facility to open and maintain an RDG account.
-
There is no fee charged for account opening. You will have to pay a gateway fee whenever you will conduct a transaction.
How To Register On The Online Portal
To register on the online portal, at first, investors have to fill an online form. The portal will further intimate the services via SMS/email.
After the successful registration on the portal, investors can buy government bonds. They can buy the same either through primary debt sales or secondary markets. Every Friday, the Government will hold the primary auctions, and they will be sold by the debt manager of the Government.
“As part of ongoing efforts of boosting retail participation in Government securities and comfort of access. The decision has been taken to provide retail investors online access to the Government securities market (both primary and secondary), move beyond aggregators and facilitate the opening of the gilt securities account.”RBI will release the details of these facilities separately. The bank has said this in a joint statement.
The payment to the aggregator could be made via UPI from the registered bank account or through the net banking facility.
Within the fixed income market, G-secs provides the highest volumes. It offers a risk-free rate and so no credit risk. Thus, retail investors will take part in G-Secs via mutual funds with restricted options. Additionally, in a debt fund, investors have to invest with a minimum of 3 years investment tenure via the growth option to get the capital gain of @20per cent with indexation advantages. The RDG scheme will now let retail investors take part in G-secs across multiple tenors with the potential to get constant cash flows via risk-free coupons and flexible investment horizons.
But you must understand the interest rate risk of this investment as well. These bonds come with a fixed maturity period. If you want to exit from the investment midway in the rising rate scenario then the investor will bear the loss.
