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New Delhi: The Economic Survey 2021-22, tabled in Parliament on Monday, highlighted the need for encouraging retail investors to invest in risk-free government securities, which have so far been accessed by institutional investors. More participation will lead to expansion of investor base and higher financial inclusion, the Survey noted.
“The recently launched Retail Direct Scheme by RBI (Reserve Bank of India) will be instrumental in channelizing the savings of middle class, small businessmen and senior citizens directly into risk free government securities," the Survey said. “With an objective to facilitate efficient direct access of retail individual investor to the G-Sec market, which was earlier directly being accessed only by large institutional investors, this scheme will give a boost to financial inclusion and broaden the investor base," it added.
Under the scheme, retail investors will be able to open Retail Direct Gilt (RDG) accounts using online portal through which it can directly invest a minimum of ₹10,000 and maximum of ₹2 crore per security.
Retail investors will be able to place a non-competitive bid in primary issuance of all central and state government securities such as Treasury Bills and bonds and access secondary market through Negotiated Dealing System-Order Matching (NDS OM) - RBI’s trading system, which was previously accessible only to select financial institutions.
“As of now, bulk of the G-Sec is held by few institutional investors like commercial banks, insurance companies and mutual funds. Diversified investor base provides flexibility to the government in its borrowing program," the Survey stated. It further added that the diversified investor base will also enable stable demand for G-sec from different investor categories.
The Survey batted for having a vibrant secondary market which would provide opportunity to investors to balance their portfolio and the availability of government securities up to 40 years provided a wide choice to such investors.
Trading though currently concentrated in a few securities is showing signs of more even spread, it added.
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