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Post at: Aug 04 2021

RBI’S Retail Direct Scheme

Recent Context

  • On 12th July 2021, through a notification, Reserve Bank of India (RBI) has decided to let retail investors directly buy and sell Government Securities (G-Secs) on its platform through its Retail Direct Scheme.

Scope of the Scheme

  • It is comprehensive scheme which provide following facilities to retail investors in government securities market through an online portal :

 

Retail Investors for scheme means individuals (natural persons)

Eligibility for Scheme

Need of the Scheme

  • Currently G-sec market is dominated by institutional investors such as banks, mutual funds and insurance companies. These entities trade in lot sizes of Rs. 5 crore or more.
  • This leaves small investors with no easy way to exit their investments. That’s why retail investors are not attracted to G-Sec market hence the need for scheme.

Importance of Scheme

 

Previous Measures taken for Retail investor Participation in G-Sec Market

  • NSE GoBid app or retail debt market (RDM) segment of exchange, but it failed due to lack of liquidity.
  • Introduction of Non-competitive bidding in primary auctions (it means bidder would be able to participate in the auctions of G-sec without having to quote the yield or price in bid).

Conclusion

  • If implemented successfully, scheme can finally bring retail investors to G-Sec market which can change India’s investment market with investment of Vast pool of domestic savings in it.

 

Kameshwar Shukla


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