The RBI has chosen to launch a mobile app for its RBI ordinary Direct scheme, which will allow ordinary investors to invest in government securities more easily.
What is the Retail Direct Scheme?
- Retail Direct Scheme was launched in November 2021, allowing individual investors to keep gilt accounts with the RBI and invest in government securities.
- This software allows investors to buy central and state government bonds, as well as Treasury bills.
- It allows investors to purchase securities at primary auctions as well as buy and sell securities via the Negotiated Dealing System-Order Matching system (NDS-OM) platform.
- A Gilt Account is similar to a bank account, with the exception that it is debited or credited with treasury bills or government securities rather than money.
How does this work?
- Small investors can use the system to buy or sell government securities (G-Secs), sometimes known as bonds, without the need for an intermediary such as a mutual fund.
- However, income from G-Secs is subject to the same tax rules.
- Bids start at ₹10,000 and increase in increments of ₹10,000.
- Payments can be made through net banking or UPI.
Benefits of RDS
- The government is the borrower, hence there is a sovereign guarantee for the funds and thus no chance of default.
- In addition, depending on current interest rate patterns, government securities may pay higher interest rates than bank fixed deposits.
How may individuals gain access to G-Sec offerings?
- Investors who want to open a Retail Direct Gilt account directly with the RBI can do so via an internet gateway created specifically for the scheme.
- Once the account is activated using a password given to the user’s mobile phone, investors will be able to purchase securities in either the primary or secondary markets.
Source: https://www.business-standard.com/finance/personal-finance/rbi-to-launch-mobile-app-for-investing-in-gov-securities-check-details-124040500389_1.html