The Reserve Bank of India on Friday announced a plan to allow retail investors to open Gilt or G-Sec accounts with the central bank. The move will help push the bond markets in India and broaden the investor base.
RBI will soon issue guidelines for this process, making India one of the few countries where retail investors can enjoy direct access to both primary and secondary government bonds.
“As part of continuing efforts to increase retail participation in government securities and to improve ease of access, it has been decided to move beyond aggregator model and provide retail investors online access to the government securities market – both primary and secondary – along with the facility to open their gilt securities account (‘Retail Direct’) with the RBI. Details of the facility will be issued separately,” RBI said in a statement.
The RBI on Friday kept the repo rate or key lending rate steady at 4 per cent while the reverse repo rate or its borrowing rate was also left unchanged at 3.35 per cent. Since March 2020, when the pandemic struck India and a nationwide lockdown was announced, the central bank has cut the repo rate by a total 115 basis points.
RBI Governor Shaktikanta Das said it was a unanimous decision by the Monetary Policy Committee to keep the rates steady. Inflation, he said, is expected to remain within the RBI’s targeted range over the next few quarters.
“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 segment in the NDS-OM secondary market, have been taken in the past,” said the RBI’s statement.