BackEconomic Survey: Focus on to get retail investors into risk-free G-Sec market
‘The recently launched Retail Direct Scheme by RBI will be instrumental in channelizing the savings of middle class, small businessmen and senior citizens directly into risk free government securities’
PremiumThe Economic survey 2021-22 highlighted the need to encourage retail investors to invest in risk-free government securities, which have so far been accessed by institutional investors. It noted greater participation will lead to expansion of the investor base and greater financial inclusion.
The survey focused on the Retail Direct scheme introduced recently by the Reserve Bank of India (RBI), which it said would be instrumental in channelizing the savings of the middle class and small businesses directly into risk free government securities.
“The recently launched Retail Direct scheme by RBI will be instrumental in channelizing the savings of the middle class, small businessmen, and senior citizens directly into risk free government securities," it said.
“With an objective to facilitate efficient direct access of retail individual investors to the G-Sec market, which was earlier directly being accessed only by large institutional investors, this scheme will give a boost to financial inclusion and broaden the investor base," the survey said.
Under the scheme, retail investors will be able to open Retail Direct Gilt accounts using an online portal through which it can directly invest a minimum of ₹10,000 and maximum of ₹2 crore per security.
Retail investors will be able to place a non-competitive bid in primary issuances of all central and state government securities such as treasury bills and bonds and access the secondary market through the Negotiated Dealing System-Order Matching (NDS-OM), RBI’s trading system, which was previously accessible only to select financial institutions.
“As of now, the bulk of G-Secs is held by few institutional investors such as commercial banks, insurance companies and mutual funds. Diversified investor base provides flexibility to the government in its borrowing program," it said. The diversified investor base will also enable stable demand for G-Secs from different investor categories.
The survey batted for a vibrant secondary market that would provide opportunity to investors to balance their portfolio and said the availability of G-secs up to 40 years would provide a wide choice.
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