The Reserve Bank of India on Friday announced the launch of a mobile application for its Retail Direct Scheme. Now, apart from the existing dedicated portal, investors can use the app for seamless investment.
The announcement was made by Shaktikanta Das, Governor of the RBI while stating the decision of the Monetary Policy Committee meeting.
Also Read: RBI Keeps Repo Rate Unchanged, Will Home Loan EMI Burden Ease Or Increase?
The Retail Direct Scheme by the Reserve Bank of India enables retail investors to directly purchase and sell government securities, eliminating the requirement for intermediaries. Introduced in 2020, this scheme serves as a comprehensive solution designed to simplify individual investors’ access to G-Sec investments.
How App Will Help Investors?
Just like investment apps allow you to easily buy and sell investments, track your portfolio performance, and access market data all from your smartphone or tablet. This makes investing more convenient and accessible than ever before. Likewise, the app for Retail Direct Scheme will create a user-friendly interface for investors.
Currently, the online portal provides retail investors with the convenience of investing in Central government securities, State Government securities and Sovereign Gold Bonds through digital channels.
Under the scheme, investors can open a Retail Direct Gilt (RDG) account with the Reserve Bank of India.
What Is Government Security?
Government security (G-Sec) means a security created and issued by the Government to raise a public loan or any other purpose as notified by the Government in the Official Gazette and having one of the following forms;
- A Government Promissory Note (GPN) payable to or to the order of a certain person; or,
- A bearer bond payable to a bearer; or
- A stock; or
- A bond held in a Bond Ledger Account (BLA).
Retail investors have the facility to open and maintain the ‘Retail Direct Gilt Account’ with RBI.
Retail Direct Gilt Account means a gilt account maintained in the books of RBI under the Retail Direct Scheme.
Why RBI Launched Retail Direct Scheme?
The investors in the Government securities market in India are mostly institutions like commercial banks, co-operative banks, regional rural banks, provident funds, insurance companies, pension funds, mutual funds and non-banking finance companies. Retail participation, i.e., participation by individuals in the G-sec market has been very limited.
Promoting retail participation in the G-sec market is beneficial to both the issuer and the investor. From the issuer‘s perspective, a diversified investor base for government bonds ensures stable demand for G-sec.
Further, a heterogeneous investor base with different time horizons, risk preferences, and trading motives ensures active trading, creates liquidity and allows the Government to raise borrowings at a reasonable cost. On the other hand, from the investors‘ perspective, it provides an alternative investment option with decent returns and capital protection.
What Are The Kinds Of Government Securities That You Can Invest Through The RBI Retail Direct Platform?
- Government of India Treasury Bills (T-Bills)
- Government of India dated securities (dated G-Sec)
- State Development Loans (SDLs)
- Sovereign Gold Bonds (SGB)
What Are The Benefits Of The Scheme?
The investor can place non-competitive bids in Primary issuance of all Central Government securities (including Treasury Bills and Sovereign Gold bonds) as well as securities issued by various State Governments.
Under this scheme, the individual can also access the Secondary market through ‘NDS OM’ – RBI’s trading system. The investor will automatically receive any interest paid/maturity proceeds into his linked bank account on due dates.
Eligibility: RBI Retail Direct Scheme
Retail investors, as defined under the scheme, can register under the scheme and maintain an RDG Account, if they have the following:
- Rupee savings bank account maintained in India
- Permanent Account Number (PAN) issued by the Income Tax Department
- Any OVD for KYC purpose
- Valid email ID
- Registered mobile number
Non-resident retail investors eligible to invest in Government Securities under the Foreign Exchange Management Act, 1999 are eligible under the scheme.
The RDG account can be opened singly or jointly with another retail investor who meets the eligibility criteria.
How To Open RBI Direct Gilt Account?
RDG Account can be opened through an online portal (https://rbiretaildirect[Dot]org[Dot]in)’ provided for the scheme.
RBI MPC Meeting April 2024 Decision
The Reserve Bank of India on Friday decided to keep policy rate unchanged for the seventh time in a row and said that it remains vigilant towards upside risks to food inflation.
The rate increase cycle was paused in April last year after six consecutive rate hikes aggregating to 250 basis points since May 2022.
Announcing the first bi-monthly monetary policy for the current financial year, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has decided to keep the repo rate unchanged at 6.5 per cent.
He said MPC will remain watchful of food inflation.
The six-member rate-setting panel by a majority vote of 5:1 favoured the status quo on interest rate, while maintaining focus on withdrawal of accommodative stance.
In February, the Consumer Price-based Inflation (CPI) stood at 5.1 per cent.
The government has mandated RBI to ensure CPI inflation at 4 per cent with a margin of 2 per cent on either side.
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