RBI's Retail Direct Scheme
The Reserve Bank of India's (RBI) Retail Direct Scheme allows individual investors to directly invest in government securities without the need for intermediaries like brokers or mutual funds.
Under this scheme, individual retail investors can open a Gilt Securities Account known as "Retail Direct Gilt (RDG)" with the RBI. Through this account, investors can buy and sell government securities using the online portal https://rbiretaildirect.org.in.
The benefits of opening an RDG account include the ability to purchase government securities directly in both primary market auctions and the secondary market. Government securities are considered low-risk investments and offer attractive yields for longer durations, with a yield curve extending up to 40 years. They also have the potential for capital gains when interest rates decrease. Government securities provide reasonable liquidity and can be transacted on the NDS-OM platform.
Investing in government securities helps diversify an investor's portfolio and reduces risk. Importantly, there are no charges associated with the Retail Direct Scheme, eliminating intermediary transaction costs.
The types of government securities available for investment through the Retail Direct platform include Government of India Treasury Bills, Government of India dated securities, State Development Loans, and Sovereign Gold Bonds.
To open an RDG account, retail investors must have a rupee savings bank account in India, a Permanent Account Number (PAN) issued by the Income Tax Department, an Officially Valid Document (OVD) for Know Your Customer (KYC) purposes, a valid email address, and a registered mobile number. Non-resident retail investors eligible under the Foreign Exchange Management Act, 1999, can also invest in government securities.
1. Visit https://rbiretaildirect.org.in and log in to begin the account opening process.
2. Provide the following details:
- Full name
- PAN (Permanent Account Number)
- Mobile number
- E-mail address
- Residential address
- Savings bank account number
- Specify a login name
3. Mobile number and email address will be authenticated using OTP (One-Time Password), and all further customer requests and services will be OTP-based.
4. If opening a joint account, provide the PAN, e-mail address, and phone number of both account holders.
5. Upon providing these details, you will receive a reference number to track your application.
6. Initiate the Know Your Customer (KYC) verification process.
7. For joint accounts, KYC verification will be conducted for both account holders.
8. Mandatory: Fill in nomination details during the account opening process.
9. The savings bank account linked to the customer will be connected to their Retail Direct account by crediting a token amount into their bank account and verifying the transaction.
10. Once KYC verification is successful, an RDG account will be opened in the name of the investor(s).
11. Information such as the account number, login ID, and password required to access the Online Portal will be provided to the customer via their registered e-mail address.
12. If there are any KYC verification failures, the individual has the option to submit a new application or make necessary changes and resubmit the application.
Overall, the RBI's Retail Direct Scheme simplifies government securities investments for retail investors by providing a user-friendly online platform and eliminating intermediary charges.