RBI to launch Mobile App for Retail Direct Scheme

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. 

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