RBI to allow retail investors to directly enter govt securities market


PTI, Feb 5, 2021, 3:39 PM IST

New Delhi: In a major move aimed at encouraging small investors to become direct investors in government bonds or stated simply to an infinite source of lending to the government, the Reserve Bank on Friday said it will allow them to directly buy into government debt, making India the first Asian country to do so and among a handful globally.

The central bank, tasked with managing a whopping Rs 12 lakh crore in government borrowing target next fiscal, hopes the move will allow greater depth to the gilt market in particular and the overall debt market in general thus deepening the financial markets as lack of depth has been the biggest bane of the domestic debt market all this while.

In effect the RBI has opened a long, endless tap for the government to borrow from – just as is done in the domestic stock market now, with the only difference being this will be under the direct watch of the RBI.

Currently, the RBI allows small investors to buy government bonds via the Gobid platform on BSE and NSE, but it has not gained any traction.

While no country allows direct retail participation as the RBI has promised now, Britain, Brazil and Hungary allow small investors to buy/sell through third-party controls.

This is the second major step that the RBI is taking to encourage retail investors to enter the gilt market after it had allowed entry through the stock exchanges a few years back but did not elicit the intended result.

Under the new plan, all an investor needs to do is to open a gilt securities account (‘retail direct’) with the RBI. This is all that is said for now, as details of the facility will be issued separately.

“As part of continuing efforts to increase retail participation in government securities and to improve ease of access, it has been decided to move beyond aggregator model and provide retail investors online access to the government securities market, both primary and secondary, along with the facility to open a gilt securities account (retail direct) with the RBI,” Governor Shaktikanta Das said while announcing the monetary policy.

It can be noted RBI has been encouraging retail participation in the government securities market for long with several initiatives like the introduction of non-competitive bidding in primary auctions, permitting stock exchanges to act as aggregators/facilitators for retail investors and allowing odd-lot segment in the NDS-OM (negotiated dealing system-order matching) secondary market, among others, in the past.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Bus loses control, falls into ditch, passengers go unharmed

Illegal immigrants should be externed or repatriated: Araga Jnanendra

SC to hear pleas of Muslim body, others against demolitions on Sep 7

Digital media is facing credibility issue, says Fadnavis

Bommai will complete term, no change in CM face: Yediyurappa

KPTCL Exam: Candidate uses smartwatch for malpractice, gets arrested

Maha: Tiger found dead on railway track in Chandrapur


Related Articles More

Sensex declines over 130 points in early trade; Nifty slips below 17,500 level

Reliance Capital posts Rs 491 crore loss in April-June

Fraudsters dupe leading e-commerce firm of Rs 3 crore

L&T Financial services inaugurates Digital Sakhi Project in Karnataka

CAG flags data non-sharing between I-T dept, MHA to track charitable trusts’ fgn receipts

MUST WATCH

NEWS BULLETIN 10-08-2022

ADGP Alok kumar Statement about Pravin Nettaru case

R Ashok Statement about Congress

Fire breaks out at coconut oil mill near padubidri

NEWS BULLETIN 09-08-2022


Latest Additions

Prophet remark row: SC clubs and transfers all FIRs against Nupur Sharma to Delhi Police

Bus loses control, falls into ditch, passengers go unharmed

Illegal immigrants should be externed or repatriated: Araga Jnanendra

SC to hear pleas of Muslim body, others against demolitions on Sep 7

Digital media is facing credibility issue, says Fadnavis

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.