RBI Retail Direct scheme to woo particular person traders for G-secs

The Reserve Bank of India (RBI) on Monday introduced the ‘RBI Retail Direct’ scheme, a one-stop resolution to facilitate funding in authorities securities (G-secs) by particular person traders.
As per the central financial institution, below the ‘RBI Retail Direct’ scheme, retail traders (people) may have the ability to open and preserve the ‘Retail Direct Gilt Account’ (RDG Account) with the RBI. “RDG account can be opened through an online portal provided for the purpose of the scheme,” it mentioned.
The on-line portal will give registered customers entry to major issuance of G-secs and entry to NDS-OM. The date of graduation of the scheme can be introduced later. “Encouraging retail participation in the Government securities market has been the focus area of the government of India and the RBI,” the RBI mentioned.

ExplainedPrevious attemptsregulators earlier tried to popularise G-secs amongst retail traders by the NSE GoBid app or retail debt market (RDM) section of the change. But these didn’t have the specified end result as a consequence of lack of liquidity. The RBI’s intention now could be to make the method of G-sec buying and selling smoother for small traders.

Accordingly, initiatives viz. introducing non-competitive bidding in major auctions, allowing bourses to behave as aggregators or facilitators for retail traders and permitting odd-lot section in NDS-OM secondary market have been taken prior to now.
As a part of persevering with efforts to boost retail participation in G-secs and to enhance ease of entry, the RBI determined to maneuver past aggregator mannequin and supply retail traders on-line entry to the
G-sec market — each major and secondary — together with the ability to open their gilt securities account (retail direct) with the RBI.
The G-sec market is dominated by institutional traders corresponding to banks, mutual funds and insurance coverage corporations. These entities commerce in lot sizes of Rs 5 crore or extra. So, there isn’t any liquidity within the secondary marketplace for small traders who would need to commerce in smaller lot sizes. In different phrases, there isn’t any simple method for them to exit their investments. Thus, at the moment, direct G-secs buying and selling is just not well-liked amongst retail traders.