RBI allows retail investors to open gilt accounts

Retail investors can feel chuffed as the Reserve Bank of India (RBI) has announced that investors can now participate in the government securities market. As part of ongoing efforts to increase retail participation in government securities, the Reserve Bank of India (RBI) announced the ‘RBI Retail Direct’ facility for the investors. The facility will allow retail investors online access to the government securities market — both primary and secondary market. For online access, investors has to open gilt accounts under the RBI’s announced ‘Retail Direct Gilt Account’ (RDB Account).

What are the features of the ‘Retail Direct Gilt Account’ (RDB Account)?

Individuals (retail investors) will be able to open and maintain a ‘Retail Direct Gilt Account’ (RDG Account) with the RBI. RDG Accounts can be opened via an ‘Online portal’ created for the scheme’s purposes with RBI.

Additionally, the ‘Online portal’ will provide services such as access to primary government securities issuance and also order-driven trading system for dealing in government securities in the secondary market. Government securities under this scheme include Government of India Treasury Bills, Government of India dated securities, Sovereign Gold Bonds (SGB), and State Development Loans (SDLs).

Who is eligible for the scheme?

Retail investors, Non-Resident retail investors can invest under Foreign Exchange Management Act, 1999 are eligible under the scheme; and lastly, RDG account can be opened singly or jointly with another retail investor who meets the eligibility criteria.

Once registered, the retail investors have the benefit of access to account statements, nomination facility, and grievance redressal as well. Further, no fee will be charged for opening and maintaining an RDG account. The registered investor will bear however fee for the payment gateway.

How to open the account? Where to open?

The web portal on which you open an account is yet to be announced. But RBI have mentioned the process of opening the account.
Investors will have to register by filling a form. The formalities include submitting and authenticating the document via OTP sent on the registered email address and mobile number.
During the process of onboarding of the investors, once the formalities are completed successful RDG account will be opened. The instructions to access the portal will be shared over SMS or email.

What return to expect?

When RBI announced that an investor could open the account Retail Direct Gilt Account (RDG account) through an online portal, there was a massive buzz as per the experts.

“Long story short – you can get good returns with the special offer from the RBI. The RBI had announced an RDS to escalate retail participation. One key point to be noted is that RBI will not be charging any money for managing or even opening the account. RBI has definite plans to increase participation and which is a good sign for the investors,” explained Rachit Chawla, CEO & Founder, Finway FSC.

Who should invest?

This account will have a broad reach. Not just Indian retail investors but non-resident retail investors should be investing in government securities. “These deposits, unlike any other bank deposit, stay for a long haul. It is also risk-free. If you are looking for a low-risk investment, you must invest with the central bank,” said Chawla.

Lastly, the scheme, a one-stop solution to facilitate investment in government securities, was issued on July 12, 2021.