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Nuts and bolts of Retail Direct Gilt account

Satya Sontanam BL Research Bureau | Updated on November 20, 2021

Key reform India is the third country to allow retail participation in government securities market

How it fares compared to existing investment platforms that facilitate retail investments in G-secs

The recently launched RBI Retail Direct platform facilitates buying and selling of government securities by retail investors. Under this scheme, retail investors can open a gilt securities account, i.e. a “Retail Direct Gilt (RDG)” account directly with the RBI, free of cost. The account offers access to various Central government and State government securities, T-bills and sovereign gold bonds (SGs).

Here’s taking a look at how the account works, its features and how it fares compared to other existing investment platforms that facilitate retail investments in G-sec.

Primary and secondary markets

The RDG account allows investors to place non-competitive bids in the primary issuance of all Central government securities (including Treasury Bills) and those issued by various State governments. The indicative yield on the security will be displayed on bidding. The RBI conducts auctions when the government wants to borrow and 5 per cent of the borrowing amount is reserved for retail investors under the non-competitive bidding.

Under this segment, retail investors don’t have the option to decide the price/yield of the security and can only bid the investment amount. The allotment under this segment is at the weighted average rate that emerges in the auction on the basis of competitive bidding by large investors.

Only one active bid will be allowed per retail client in the non-competitive portion for respective security with minimum investment of ₹10,000 (face value) and maximum of ₹2 crore. Once the bid is placed, it could be amended or withdrawn any time before the bid closing period — an issue is generally open for two to three working days. Also, payment for the bid — based on indicative price, accrued interest, if any, along with a mark-up (₹500 to ₹1,000 for a bid amount of ₹10,000 and increases with the bid amount) for protection against any adverse price movement — has to be made before the bid closes. Otherwise, the bid will be cancelled. Once the allocation is made, any excess amount taken in the form of mark-up will be credited to the investor’s bank account linked to the RDG account.

The RDG account also provides access to secondary market trading through “NDS-OM” — the central bank’s screen-based electronic order matching system. The retail direct investor can trade in government securities in the retail portal (Odd Lot segment) on this platform with minimum trading lot of ₹10,000.

By providing access to NDS-OM, India has now become one among few countries that allow retail investors to transact on the central bank’s trading platform, which is currently accessible to institutions such as banks, insurance companies, foreign investors and pension funds.

Decoding the new way to invest in G-secs


Note that before initiating a buy trade on NDS-OM, the investor should have adequate funds in the current account of the Clearing Corporation. The funds to this account can be transferred using net banking or UPI facility provided with the RDG account. Similarly, while selling a security before its maturity on the trading platform, the investor must possess the security in their gilt account.

Any interest or the maturity proceeds on the securities held by an investor as on the due date will be automatically credited to the bank account linked to the RDG account.

This way, to the platform (top) Dashboard showing list of primary market issuances, bid entry and bidding history (left) Web screen for secondary market access of government securities — NDS-OM — for retail investors

KYC and process

All individuals, including non-residents and minors (through guardians), can open an RDG account. The on-boarding process is not easy though it can be done completely online. Unless one opts for offline KYC, the KYC as per RBI guidelines is based on the central KYC records (CKYC) maintained with CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India).

In case of any mismatch/unavailability of CKYC records with actual records, the already lengthy KYC process gets even more delayed.

The pre-requisites to open an RDG account include PAN, Aadhaar, rupee savings account, email ID and mobile number. Keeping scanned documents of PAN, Aadhaar, cancelled cheque and signature comes in handy while opening the account. It is mandatory for the investor to fill in the nomination details at the time of opening the account. After KYC is done, the login details will be mailed to the registered mail ID in 24 hours. In case of a joint account, KYC verification has to be done for both the account holders.

While the account is opened with the RBI, the securities bought through the account — primary or secondary — will be maintained with the Clearing Corporation of India, which is responsible for settling transactions undertaken on the platform.

Once the account is opened, you can bid and invest in the securities issued in the primary market. To participate in the secondary market, one has to request access to NDS-OM platform, up on which Clearing Corporation ID will be assigned. This, again, is time-consuming — at least as of now — as the credentials are not being shared for a couple of days.

In addition to bidding and secondary market access, the platform provides information about the holdings on a daily basis, transaction history including bidding, funding, allotment and refund and corporate actions on the government security investments, such as distribution of coupons and redemption proceeds.

Retail direct investors will also be notified about such updates through messages on their registered mobile and email ID. Periodic statements on holdings will also be provided.

Besides, the account facilitates creating of pledge/lien on the government securities in its RDG account, conversion of holdings in the RDG account to demat securities and vice-versa and gifting the securities in one’s name to others.

For support, one can reach out to 1800 267 7955, which seems to be quite receptive, or write to Investors can also lodge a complaint, for which neatly categorised heads such as KYC, primary/secondary access, allotments, refunds, coupons, etc., are given.

What’s new?

Over the years, the entire process of retail investors buying G-secs in the primary market has become a lot simpler.

Now, one can participate in the G-sec auction in the primary market through a demat account. ICICI Securities, HDFC Securities, Zerodha and NSE’s goBID are a few that allow investments in G-sec.

The RDG account — in spite of complex KYC and delay in granting access — scores well mainly on two aspects. Firstly, not all existing platforms provide access to State Development Loans (SDLs) and hence this is a positive. Secondly, the RDG account facilitates trading on RBI’s NDS-OM retail segment.

Usually, if you have a gilt account with banks or primary dealers (PDs), you can request them to place your order or provide access to NDS-OM. The RDG account now comes with direct access to the page. Otherwise, to buy/sell the G-sec in the secondary market, one has to approach the stock exchange where the G-secs are listed but with poor liquidity.

The liquidity on the retail segment of NDS-OM platform is also currently challenging. Joydeep Sen, an independent debt market analyst, says the success of the RDG account hinges on how well liquidity is improved, providing access to retail investors.

The other benefits with RDG account include no requirement of demat account and low/no cost of transacting compared to others. No fee is charged to open and maintain RDG account with the RBI. Nominal fee for payment gateway, as applicable, will have to be borne by the investor.

Published on November 20, 2021

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