{"id":4605,"date":"2021-11-16T15:16:52","date_gmt":"2021-11-16T09:46:52","guid":{"rendered":"https:\/\/aayushbhaskar.com\/?p=4605"},"modified":"2023-01-09T20:01:20","modified_gmt":"2023-01-09T14:31:20","slug":"what-is-rbi-direct-investment-scheme-explained","status":"publish","type":"post","link":"https:\/\/aayushbhaskar.com\/what-is-rbi-direct-investment-scheme-explained\/","title":{"rendered":"What is RBI Retail Direct Scheme?","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"
Government securities are one of the most stable funds as they are risk-free and guarantee some fixed return on investment every year. <\/span><\/p>\n It also guarantees a complete repayment of capital investment when the government bond matures. <\/span><\/p>\n To enhance access to such government securities, the Indian Prime Minister recently launched the RBI\u2019s Retail Direct Investment Scheme. <\/span><\/p>\n This scheme allows small investors to invest in all types of state and central government bonds with assured returns.\u00a0<\/span><\/p>\n The Retail Direct Investment Scheme is an initiative by the Indian government to enable retail investors to invest in government securities directly, without any hassle. <\/span><\/p>\n The government bonds can be bought and sold online.<\/span><\/p>\n The minimum investment amount in RBI retail direct scheme is Rs 10,000 and it’s multiples.<\/strong><\/p>\n Central Government Securities, Treasury bills, and State Government Securities can be bought under this scheme online.\u00a0<\/span><\/p>\n All you need as an investor is to open a Retail Direct Gilt account with the Reserve Bank of India.\u00a0<\/span><\/p>\n The maximum you can invest per bid under this scheme is two crore rupees. <\/span><\/p>\n The primary dealers, the firms that buy government bonds<\/a> directly from the government and then sell them to the investors, are expected to come up with the buy and sell quotes soon to enable retail investors to buy and sell government securities in the secondary bond market.\u00a0<\/span><\/p>\n The first time when this scheme was mentioned was back in February 29021, under the Indian monetary policy amendments. <\/span><\/p>\n However, on the 12th of November, India\u2019s PM officially launched the scheme, stating \u201cthe Retail Direct Scheme will give strength to the inclusion of everyone in the economy as it will bring in the middle class, employees, small businessmen and senior citizens with their small savings directly and security in the government securities.\u201d\u00a0<\/span><\/p>\n Before the launch of this particular scheme, big institutional investors, including mutual fund<\/a> companies, insurance companies, banks, and similar organizations highly dominated the Indian Bond market. This did not leave much space for small retail investors to participate in having a share in the government bond for themselves. <\/span><\/p>\n However, with government securities offering one of the highest volumes in the fixed income market due to its risk-free characteristics, it is also one of the most flexible horizons that can enable retail investors to get regular cash flows throughout the investment period. <\/span><\/p>\n Hence, this launch is definitely a much-awaited one, which is not only going to benefit the government through a capital-raise but also the investors who will earn an assured interest on the same.\u00a0<\/span><\/p>\n All the individual retail investors who want to enter into the government securities market and enjoy the aligned benefits can do so by opening and maintaining the Retail Direct Gilt Account by the Reserve Bank of India.<\/p>\n Through this account, they can directly invest in the g-secs and also get exposure to the RBI Retail Direct Investment Scheme.<\/p>\n Investors will get access to both primary and secondary markets.<\/p>\n In the primary market, they will be buying directly from the Receiver Bank of India. Whereas, in the secondary market, they will be able to purchase government securities from other investors at the ongoing market price.<\/p>\n The RDG account is created specifically for the RBI Retail Direct Investment scheme and only requires a few easy steps to be opened online.<\/p>\n All registered primary investors can access the primary g-sec issuances along with Negotiating Dealing System Order Marching Systems (NDS-OM) as well.<\/p>\n The NDS-OM is basically an electronic\/online order match system that matches orders in the secondary market for government securities.<\/p>\n By using the Retail Direct Gilt Account, one can invest in the central government bonds, Government of India Treasury Bills, State Development Loans (SDLs), State Government Bonds, and even the Sovereign Gold Bonds during the specified time frame.<\/p>\n Lastly, if we talk about the gains with the Retail Direct Gilt Account, the capital gains are going to be calculated across all securities that you hold\/trade in a financial year if you opt for direct g-sec investing.<\/p>\n However, when you invest\/trade with Gilt mutual funds, the capital gains will be calculated for the period that you hold the mutual fund units for, no matter how many trades are executed during the scheme management.<\/p>\n <\/p>\n The three categories of people eligible to apply for the scheme are \u2013<\/span><\/p>\n <\/p>\n <\/p>\n Currently, about 97 government securities are outstanding that have tenures between 3 months to 40 years. <\/span><\/p>\n All of these securities combined total to about 79 lakh crore rupees. The central government of India is looking forward to borrowing as much as around 12 lakh crore rupees by issuing government bonds to both institutional and retail investors.\u00a0<\/span><\/p>\n As soon as the scheme launched, there was a massive inflow of registrations in a matter of a few hours. 12,000 registrations took place with active participation from investors holding Sovereign Gold Bonds.\u00a0<\/span><\/p>\n The new scheme offers investors access to the secondary market, which the majority of people are most excited about. This is because secondary market investing is known to provide higher returns over shorter periods. <\/span><\/p>\n Similarly, investing in the government securities through the secondary market is also existing new-age investors to be able to earn significant returns in not much time.\u00a0<\/span><\/p>\n Investors can access the g-sec\u2019s secondary market portal through the central bank\u2019s retail direct portal online. An ID from the Clearing Corporation of India Ltd. is going to be issued to each individual investing in the secondary market. <\/span><\/p>\n Thereafter, the order marching, and quiet requests can be accessed by investors online.\u00a0<\/span><\/p>\n Investors can place, buy, and sell orders through their retail direct gilt account. This is to be done after they remit the funds through an online payment system. To the retail portal. The extent to which your account holds a balance can be used to make g-sec purchases instantly. <\/span><\/p>\n At last, an investor can settle the trade based on T+1, which means one day after the transaction date.\u00a0<\/span><\/p>\n You can most definitely look forward to buying a held-to-maturity bond in the current time, as it is expected to save you from the ongoing market-to-market volatility. It will be a suitable bet for those who look for steady returns and capital safety while investing.<\/span><\/p>\n However, since the scheme has just launched, waiting for about 4 to 6 months is a reasonable time to analyze where the market is moving and how it is performing. <\/span><\/p>\n The RBI Retail Direct Investment scheme\u2019s success is going to depend on the liquidity of these bonds when an investor comes forward to sell it and if they can sell it off at a profitable rate. \u00a0<\/span><\/p>\n Currently, anybody opting for this particular direct route of getting into the government securities market must be well-informed about the market and all the factors that impact and move the prices of these securities.<\/p>\n It is also advised to learn more about what the government is up to, has done, and is planning to do, to get an idea of the government’s current position. If you are new to investing, taking professional assistance will help you make better and wiser investment decisions.<\/p>\n Here are the official links to RBI Retail Direct Scheme in case you want more information:<\/p>\n Government securities are one of the most stable funds as they are risk-free and guarantee some fixed return on investment every year. It also guarantees a complete repayment of capital investment when the government bond matures. To enhance access to such government securities, the Indian Prime Minister recently launched the RBI\u2019s Retail Direct Investment Scheme. …<\/p>\n","protected":false,"gt_translate_keys":[{"key":"rendered","format":"html"}]},"author":4,"featured_media":4613,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[4],"tags":[19,166,165,18],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/aayushbhaskar.com\/wp-content\/uploads\/2021\/11\/rbi-retail-direct-scheme-explained.png","acf":[],"yoast_head":"\nWhat is a Retail Direct Scheme?<\/span><\/h2>\n
Introducing the Retail Direct Investment Scheme in the Indian Market<\/span><\/h2>\n
What is RBI’s Retail Direct Gilt Account?<\/h2>\n
Who can apply for the Retail Direct Gilt Account?<\/span><\/h2>\n
\n
Benefits of investing through the Retail Direct Investment Scheme\u00a0<\/span><\/h2>\n
\n
How can you invest in government securities through this scheme?<\/span><\/h2>\n
\n
What is the state of government bonds as of now?<\/span><\/h2>\n
Secondary Market Investing Benefits through the RD Investment Scheme<\/span><\/h2>\n
So, is this the right time to invest in government securities right now?<\/span><\/h2>\n
\n