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New Delhi: Prime Minister Narendra Modi launched two innovative customer-centric initiatives of the Reserve Bank of India (RBI) — Retail Direct Scheme and the Reserve Bank-Integrated Ombudsman Scheme — on Friday via video conference. The Retail Direct Scheme allows retail investors to buy and sell government bonds online. The RBI had announced the scheme in its February 2021 monetary policy. Speaking at the launch of these two schemes, PM Modi said that these schemes will expand the scope of investment in the country and make access to capital markets easier, more secure for investors.
The retail direct scheme has given small investors in the country a simple and safe medium of investment in government securities. Similarly, One Nation, One Ombudsman System has taken shape in the banking sector with the Integrated Ombudsman Scheme today, said Modi.
The PM emphasised on the citizen-centric nature of these schemes. He said that one of the biggest touchstones of any democracy is the strength of its grievance redressal system. The Integrated Ombudsman Scheme will go a long way in that direction, said the PM. Similarly, the 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 securely into government securities. As government securities have the provision of guaranteed settlement, this gives assurance of safety to the small investor, he said.
PM Modi said that in the last seven years, non-performing assets (NPAs) were identified with transparency, the focus was on resolution and recovery, Public Sector Banks (PSBs) were recapitalised, one after the other reforms were carried out in the financial system and public sector banks. To further strengthen the banking sector, cooperative banks were also brought under the purview of the RBI. Due to this the governance of these banks is also improving and the trust in the system is getting stronger among the depositors, said the PM.
RBI Retail Direct Scheme allows retail investors to buy and sell government securities (G-sec) online both in the primary and secondary markets. According to details provided by RBI, these small investors can now invest in G-Secs by opening a gilt securities account with the RBI. The account opened will be called Retail Direct Gilt (RDG) Account.
As per the notification issued by the RBI on July 12, a retail investor can open the RDG account if they have the following: Rupee savings bank account maintained in India, PAN issued by the Income Tax Department, any official valid document such as Aadhaar, Voter ID for KYC purpose, valid email ID, and registered mobile number. The RDG account can be opened singly or jointly with another retail investor who meets the eligibility criteria.
Investors can register on the online portal by filling up the online form and using the OTP received on the registered mobile number and email ID to authenticate the information. Upon successful registration, 'Retail Direct Gilt Account' will be opened and details for accessing the online portal will be conveyed through SMS/e-mail.
RDG Account shall be available for primary market participation as well as secondary market transactions on NDS-OM.
Once the account is opened, retail investors can buy government securities in the primary market, where government bonds are issued for the first time or buy/sell the existing government bonds in the secondary market.
Participation and allotment of securities will be as per the non-competitive scheme for participation in the primary auction of government securities and procedural guidelines for sovereign government bond issuance. Only one bid per security is permitted. On submission of the bid, the total amount payable will be displayed. Payment to the aggregator / receiving office can be made through using the net-banking/UPI facility from the linked bank account, whereby funds will be debited at the time of submission of bids on the portal.
As per the RBI, no fee will be charged for opening and maintaining 'Retail Direct Gilt account.' Further, no fee will be charged by the aggregator for submitting bids in the primary auctions. However, any payment gateway charges will be borne by the registered investor, as applicable.
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