More than two years after the government promised retail investors an avenue for owning government securities, leading bourses BSE and NSE have on Tuesday launched online platforms that allows retail investors to invest in such securities and hold them in their existing demat accounts.
The exchanges will act as facilitators for non-competitive bidding in government securities and treasury bills.
In a release, NSE said it has launched a "e-Gsec" platform for facilitating the non-competitive bidding in Government of India Dated Securities (G-Sec) and Treasury Bills (T-Bills)"
The BSE said it would offer an online bidding platform 'NCB-GSec' for collecting bids from members on behalf of their clients.
The government issues securities to borrow money from the market. Securities are offered to investors through auctions which are competitive and non-competitive. Large investors, such as banks, primary dealers, financial institutions, mutual funds and insurance companies, generally participate in the competitive auctions by placing bids directly to the Reserve Bank of India (RBI).
The Union Budget 2016-17 had announced that RBI will facilitate retail participation in the primary markets through stock exchanges.
The RBI conducts auction for G-Sec and T-bills on a weekly basis where 5 per cent of the notified amount is allotted for eligible investors under the scheme for non-competitive bidding facility.
NSE said the launch of its e-Gsec platform provides investors an opportunity to participate in the G-Sec auction of April 26 and the subsequent weekly auctions of G-Secs and T-bills.
Vikram Limaye, managing director and chief executive officer of NSE said non-competitive bidding through exchanges is an efficient mechanism for delivering government securities to retail clients.
"Promoting retail participation in government securities benefits both the issuer and the investor. For the government it provides a diversified investor base and for retail investors an ability to diversify their investment portfolio to an asset class providing capital protection and decent returns," he said.
Until now retail investors could buy G-Secs only by putting bids in auctions through their authorised banks/primary dealers or buy in the secondary market. Investments in government securities are one of the safer investment options available to retail investors. These risk-free instruments provide portfolio diversification and are available for longer investment durations.