NEW DELHI: In a major structural reform, the Reserve Bank of India (RBI) on Friday allowed retail investors to access to the government securities (G-sec) market.
Announcing the RBI's monetary policy review for the month of February, governor Shaktikanta Das said that the move will make India the first Asian country to do so and among a handful globally.
"As part of continuing efforts to increase retail participation in government securities and to improve ease of access, it has been decided to move beyond aggregator model and provide retail investors online access to the government securities market -- both primary and secondary -- along with the facility to open their gilt securities account
(‘Retail Direct’) with the RBI," Das said.
Retail Direct will allow direct access to retail investors via the RBI and they will be able to open their Gilt accounts.
The RBI governor said that the move will help in smooth completion of the government's borrowing target for 2021-22.
The central bank has been tasked with managing a whopping Rs 12 lakh crore in government borrowing target next fiscal. It hopes that the move will allow greater depth to the gilt market in particular and the overall debt market in general, thus deepening the financial markets as lack of depth has been the biggest bane of the domestic debt market all this while.
At present, the RBI allows small investors to buy government bonds via the Gobid platform on BSE and NSE, but it has not gained any traction.
G-secs are one of the safest fixed income instruments available in India.
It is a tradeable instrument issued by the Central government or the state governments and acknowledges the government’s debt obligation.
Details of the Retail Direct facility will be issued by the RBI separately.
The RBI has been encouraging retail participation in G-sec market for long. It has announced several initiatives like introduction of non-competitive bidding in primary auctions, permitting stock exchanges to act as aggregators/facilitators for retail investors and allowing odd-lot segment in the NDS-OM (negotiated dealing system-order matching) secondary market, among others, in the past.
(With inputs from PTI)