As part of continuing efforts to increase retail participation in government securities and to improve ease of access, the RBI has decided to move beyond the aggregator model and provide retail investors online access to the government securities market.
Now, the access will be provided in both primary and secondary markets along with the facility to open their gilt securities account (Retail Direct) with the RBI. Details of the facility will be issued separately.
Encouraging retail participation in the Government securities market has been the focus area of the Government of India and the RBI. Accordingly, several initiatives viz. introduction of non-competitive bidding in primary auctions, permitting stock exchanges to act as aggregators/facilitators for retail investors and allowing odd-lot segments in the NDS-OM secondary market, had been taken in the past.
Providing direct access to government securities will provide a new avenue for retail investors and at the same time provide a channel for the government to fund economic growth, according to ICICI Direct Research.
“Providing retail investors a direct option to invest in government securities is a good development from a long term perspective,” says Lakshmi Iyer, CIO â€“ Debt & Head â€“ Products, Kotak Mahindra AMC.
“It may just be the beginning of a viable substitute for small savings schemes at market rates. However, much like sovereign gold bonds, likely pick up pace will be at a slow rate,” opines Mahendra Jajoo, CIO, Fixed Income, Mirae Asset Management India.
Usually, the government securities market is majorly driven by institutional investors like mutual funds, banks, insurance companies. Small investors are also allowed to bid for government securities via their demat accounts. But such access was allowed only to the secondary market in government securities via the Reserve Bank of Indiaâ€™s NDS-OM System. The latest move widens the access to both secondary and primary market segments.
Primary markets are where a security is issued for the first time, while secondary markets are where buying and selling of already issued securities happens.