RBI starts Gilt for retail investors, here's how to invest

Source :Sify
Author :Finance Desk
Last Updated: Mon, Jul 12th, 2021, 20:58:39hrs
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Reserve Bank of India

Mumbai: The Reserve Bank of India has announced that retail investors can soon participate in gilt funds through a website directly administered by the Reserve Bank of India.

Gilts is short form for Government issued Long Term Stocks. In a note the apex bank said that its RBI Retail Direct Scheme will act as a one-stop facilitation center for investment in Government and government backed securities by individual investors.

RBI Retail Direct scheme will basically allow investors to:

  1. Open and maintain a 'Retail Direct Gilt Account' (RDG Account) with RBI.
  2. An 'Online portal' will be provided to access the RDG account. The website is yet to be named.
  3. Registered users can access information such as access to primary issuance through government securities and access to NSD-OM via the Online portal. Date of commencement of the scheme will be announced at a later date.

The Reserve Bank of India is also expected to unveil NDS-OM, a screen based, anonymous electronic order matching system for trading in Government securities in the secondary market.

The securities available on the portal includes Government of India Treasury Bills, Government of India dated securities, Sovereign Gold Bonds (SGB) and even State Development Loans (SDLs).

Eligibility norms for retail investors are as follows:

  1. Rupee savings bank account maintained in India;
  2. Permanent Account Number (PAN) issued by the Income Tax Department;
  3. Any OVD for KYC purpose;
  4. Valid email id and Registered mobile number.
  5. Non-Resident retail investors eligible to invest in Government Securities under Foreign Exchange Management Act, 1999 are eligible under the scheme.
  6. The RDG account can be opened singly or jointly with another retail investor who meets the eligibility criteria.

The RDG account with the RBI will not carry any charge. RBI is not billing aggregators for submitting bids in primary auctions. However, there could be charges and fees to be paid for using the payment gateway services.

Although gilt funds are perceived as safe since they are government backed securities, in reality growth prospects for such funds hovers around major policy announcements. In fact, returns on debt schemes turned to negative in 2018 and ditto for long term debt funds in 2021.

More additional information regarding the RBI portal and details of schemes is expected soon. 

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