Reserve bank of India, on 12th July 2021 released Retail Direct Scheme: Allowing Retail Investors to open Gilt Accounts with RBI. ‘The RBI Retail Direct’ facility was announced in the Statement of Developmental and Regulatory Policies dated February 05, 2021, As part of continuing efforts to increase retail participation in government securities, for improving ease of access by retail investors through online access to the government securities market, that is both primary and secondary, along with the facility to open their gilt securities account (‘Retail Direct’) with the RBI.[1]

A one-stop solution, that is ‘RBI Retail Direct’ scheme that will facilitate investment in Government Securities by individual investors is being issued on July 12th. Retail investors (individuals) will have the facility to open and maintain the RDG Account (Retail Direct Gilt Account) with the Reserve Bank of India. A retail direct Gilt account can be open for the scheme through an online Portal. Access to the NDS-OM, access to primary issuance of Government Securities will be given to the registered user through the online portal. The date for commencement has not been announced yet.

The annexure was issued together which contained definitions, the scope of scheme, eligibility, the procedure for registration, market participation, etc., investor services, fees, and charge.

The scheme allows which provides facilities to retail investors and provides them an online portal to open and maintain an RDG account, provide access to primary issuance of Government securities and NDS-OM. Retail investors are eligible if they have a rupee saving bank account in India, PAN issued by the Income-tax department, OVD for KYC purpose, a valid e-mail id, registered Mobile Number. Non-resident retail investors are also eligible under this scheme through Foreign Exchange Management Act, 1999. The RDG account can be opened singly or jointly with another retail investor.

Registration can be done by the investors by filling up the online form and using a one-time password received to authenticate and then submit the form. New York customer directions, 2016 updates from time to time, and the investors will have to adhere to it. RDG account is available for both primary market participation and secondary market transactions on NDS-OM. Under primary market participation, the participation and allotment of securities are as per the non-competitive scheme, for participating in the primary auction of government securities. Only one bid per security is allowed and the total amount payable will be displayed after submitting the bid. Payment to the receiving office can be done in many ways, refund will depend on the timelines specified by the aggregator. On the day of settlement, the allotted securities will be issued to the investors by credit to their retail direct Gilt account.

Under Secondary market transactions, Registered investors can use the online portal to buy or sell government securities by accessing the secondary market transaction link. There are different modes of payment given if the person wants to buy the government securities. For selling the securities, at the time of placing the order the security is identified for sale will be blocked till the settlement of the trade and on the day of settlement, the funds from the sale transaction will be credited to the linked bank account.

Investor Services include account statement, nomination facility, pledge, lien, gift transaction, grievance Redressal. There are no fees charged for opening or maintaining the RDG account nor for Submitting bids in the primary auction. However, the registered investor will have to pay fees for payment gateway, etc. that are applicable.

[1] https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51883

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