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Business News/ Markets / RBI’s Retail Direct Scheme for G-Secs to broaden investor base: Economic Survey
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RBI’s Retail Direct Scheme for G-Secs to broaden investor base: Economic Survey

Under the scheme, retail investors can open a Retail Direct Gilt (RDG) account using an online portal through which they can directly invest a minimum of ₹10,000 and maximum of ₹2 crore per security

RBI Retail Direct Scheme was launched on 12 November 2021 as a one-stop access to facilitate investment in government securities by retail investors.Premium
RBI Retail Direct Scheme was launched on 12 November 2021 as a one-stop access to facilitate investment in government securities by retail investors.

NEW DELHI: The recently launched Retail Direct Scheme by the Reserve Bank of India (RBI) will be instrumental in channelising the savings of the middle class, small businessmen and senior citizens directly into risk-free government securities (G-Secs), said the Economic Survey 2021-22, tabled in the Lok Sabha on Monday.

RBI Retail Direct Scheme was launched on 12 November 2021 as a one-stop access to facilitate investment in government securities by retail investors.

According to the Survey, a vibrant secondary market provides opportunity to the investors to balance their portfolio as desired.

“Availability of government securities of up to 40 years provides a wide choice to the investors. Trading though currently concentrated in few securities, is showing signs of more even spread… With an objective to facilitate efficient direct access of retail individual investor 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 Economic Survey said.

Under the scheme, retail investors can open a Retail Direct Gilt (RDG) account using an online portal through which they can directly invest a minimum of 10,000 and maximum of 2 crore per security.

The retail investors can not only place a non-competitive bid in primary issuance of all central and state government securities such as Treasury Bills and bonds but also access the secondary market through Negotiated Dealing System-Order Matching (NDS OM), RBI’s trading system, which was previously accessible only to select financial institutions.

The Survey also highlighted that as of now, bulk of the G-Sec 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. Also, it would enable stable demand for G-sec from different investor categories," it added.

The Survey also highlighted that the share of mutual funds in India’s public debt increased from 1.4% at the end of March 2020 to 2.94% at March-end 2021. Public debt is largely owned by institutional segments such as banks, insurance companies, provident funds etc.

Meanwhile, the share of commercial banks stood at 37.77% at end-March 2021, lower than 40.4% at end-March 2020. Share of insurance companies and provident funds at end-March 2021 stood at 25.3% and 4.44%, respectively. The share of RBI in public debt went up to 16.2% at 31 March 2021 from 15.1% at end-March 2020.

Meanwhile, as per the Economic Survey, net assets under management (AUM) of the mutual fund industry rose by 24.4% to 37.3 lakh crore at the end of November 2021 from 30.0 lakh crore end of November 2020.

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Published: 31 Jan 2022, 02:30 PM IST
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