Reserve Bank of India (RBI) - Retail Direct Scheme
BOOK A FREE CONSULTATION
Get help from an experienced legal adviser. Schedule your consultation at a time that works for you and it's absolutely FREE.
It is scheme design and develop to increase investment in Government Securities by Individual Investors, as part of continuing government effort to increase retail participation in government securities. Under this scheme, retail investor can open and maintain the "Retail Direct Gilt Account" with RBI. The scheme is officially launched and made available to public from November 12, 2021 inaugurated by Hon'ble Prime Minister Shri. Narendra Modi via virtual mode.
Scope of Scheme:
It provides the following facilities to retail investors in government securities which was not available earlier.
- Open and maintain a "Retail Direct Gilt Account" (RDG Account)
- Access to primary issuance of Government Securities
- Access to NDS-OM
Subject to clarify here are:
RDG Account is like an official bank account of debit and credit of government securities transaction as like any other Bank Account.
Government Securities under this scheme are Government of India Treasure Bills, Government of India dated securities, Sovereign Gold Bonds (SGBs), and State Development Loans (SDLs).
NDS-OM means RBI's screen-based, anonymous electronic order matching system for trading in Government Securities in the secondary market.
Only Individual (natural person) is eligible as Retail investor to participate on this scheme which has following documents or accounts: -
- Rupee savings bank account maintained in India;
- PAN issued by Income Tax Department;
- Any Officially Valid Document (OVD) for Know Your Customer (KYC) purpose like Passport, Driving License, Aadhar Card, Voter Identity Card.
- Valid E-mail ID and Registered Mobile Number
The non-resident retail investor is eligible to invest in Government Securities under Foreign Exchange Management Act, 1999.
Further RDG Account can be opened singly or jointly with another retail investor who meets the eligibility criteria.
Investor can register on the online portal by filling up the online form and use the One Time Password (OTP) received on the registered mobile number and email id to the authenticate and submit the form. RDG Account shall be available for primary market participation as well as secondary market transaction on NDS-OM.
Under Primary Market Participation, it's like applying for Initial Public Offering (IPO) for Government Securities as per given guidelines and framework. Whereas under secondary market, retail investor can participate on buy and sell transaction of Government Securities. In fact, it is also similar to stock market operation at secondary segment but the underlying assets is predefined i.e. Government Prescribed Securities.
Under this scheme, unlike others the facility like obtaining account statement (history and balance) as well alert services is also provided through e-mail/SMS. Nomination can be filed/given on RDG Account. RDG Account securities can be pledge and lien for other services. RDG Holder can gift the securities to other RDG Account Holder. The proper grievances cell is designed to look after such retail transaction from retail investor under RDG Account.
Fees and Charges:
The Account opening and maintaining charges is Nil and even the aggregator functioning on placement of bids on primary auction like IPO are free however the gateway and fund settlement charges are applicable as per the service providers terms and condition bear and born by registered retail investors. Here aggregator means to Clearing Corporation of India Limited as on date or other may be notified in due course by RBI.
It can be concluded as more prudent, safe and secure means of Investment for small ticket retail investor among the others. Unlike earlier, now on wards the retail investor can enjoy the benefit of earning on Government Securities directly instead of making small fund part at Bank as Fixed Deposit or Term Deposit or Mutual Funds or Securities. Comparatively the risk is not so high on such investment and can provide bit above the returns on saving and fixed deposit, like of Investment source available to Retail Investor.