RBI Retail Direct Scheme – Features, How to purchase/sell Govt securities online
Few days back, Prime Minister of India has launched the RBI Retail Direct Scheme where retail investors can directly purchase and sell government bonds online. This is simple platform where a retail investor can register, do kyc and start investing in government bonds online. Investors can invest in various government bonds, which have 90 days to 40 years tenure. In this article we would provide details about RBI Retail Direct Scheme, How to open an Retail Direct a/c, how to purchase and sell government bonds online.
Also Read: LIC Launches Dhan Rekha – Money Back Guaranteed Plan
What is RBI Retail Direct?
It is the platform where retail investors can purchase and sell government of India securities online. This platform allows retail investors to buy and sell G-Sec online in both primary and secondary markets. Retail investors need to open gilt securities account with RBI, which is called Retail Direct Gilt (RDG) account.
Government Bonds have yield up to 6.95% and are 100% safe investment option. Hence, many investors are looking towards investing in such schemes.
Who is eligible to open this RBI Retail Direct Gilt Account?
Retail investors can open RDG account if they have the following:
1) Rupee Savings bank account in India
2) PAN Card
3) Voter Card / Aadhaar card for CKYC purpose
4) Valid email Id and registered mobile number
Non Residential Indian (NRI) are also eligible to invest in government securities through the this platform.
How to do RBI Retail Direct Scheme registration Online?
Here is the step by step process of registering Gilt account RBI online.
1) Visit RBI Retail Direct scheme registration link
2) Enter account type – Single or Joint Account
3) Enter full name, PAN Card number, email ID, mobile number, date of birth and login name
4) Preview and submit the details
5) Click on “Initiate KYC”. You would find two alternatives, one is CKYC – Recommended or Offline KYC.
6) Search for the information based on PAN. If PAN details not available in database, you might get error “Failed to search CKYC number, please try again later”. In such case, you need to proceed with offline KYC.
7) For CKYC compliant, investors can choose DOB or DOI as Authentication key and proceed
8) Review the information displayed on screen and click submit.
9) Additional personal details needs to be filled
10) Investor need to confirm address
11) Choose bank account, upload blank cheque. If the blank cheque is not available, skip this section and enter the details manually in the next step.
12) A random amount is inputted to investor’s bank account. They need to enter this amount.
13) Enter nominee information
14) Review terms and conditions and click submit where CKCY is completed.
If investors are facing any issues, they can reach toll free number 1800 267 7955 or email to support@rbiretaildirect.org.in.
Once the account is opened, details would be shared on email and on mobile. Once successful registration, one can buy g-sec from primary market and buy /sell on secondary market.
How to buy G-Sec from primary market through RBI Retail Direct?
Since we undertstod RBI retail direct account opening process, let us check , how retail investors can purchase g-securities through this platform.
One can participate and allotment would be done on the non competitive scheme in the primary auction of govt securities. Only one bid per security is permitted. Once you submit a bid, total amount payable would be displayed. Investors can make the payment through net banking and UPI. Investors can also submit the bid with ASBA facility where funds would be blocked at the time of submission of bids on the portal. Once allotment is done, the amount would be deducted from the bank account. Once securities are allotted, these would be reflect on RDG account of the investor.
How to buy or sell G-Sec from secondary market through the RBI Retail Direct Platform?
Once registration is done, NDS-OM of this platform can be used to buy and sell g-sec.
Before the start of the trading hours, investors should transfer funds to the designated account of CCL (Clearing Corporation of India NDS-OM) using net banking or UPI.
Based on the funds available, one can see buying limit.
One can put buy order.
Securities purchased would get allocated to the RDG account on the settlement day.
At the end of the trading session, any surplus or excess funds would be transferred to investor’s bank account.
For selling g-securities on RBI retail direct, one can place an order to sell and funds would be credited to investors bank account on settlement day.
What are various government securities available on this platform?
The following securities are available for buying and selling.
1) Government of India Treasury Bills
2) Government of India Dated Securities
3) Sovereign Gold Bonds
4) State Development Loans
What are the charges in RBI Retail Direct?
RBI indicated that there would not be any fees for buying and selling G-Sec bonds on this platform. Even an aggregator should not levy any charges. However, there could be payment gateway charges that might get levied which investors need to be borne.
Benefits of RBI Retail Direct Platform
Here are the benefits of this platform:
1) Investors can purchase g-sec bonds directly from the primary market.
2) Retail investors can buy and sell government bonds in the secondary market.
3) There are zero charges to maintain this RDG account.
4) Investors can get interest on the securities directly to the linked bank account.
5) Investors can take a loan against the securities available in RDG account.
6) Retail investors can gift g-sec to other investors.
What are various G-securities available now?
You might be wonding, what is the RBI retail direct scheme interest rate and yield and how to track them?
Currently there are G-securities for 90 days to 40 years tenure. The yield is between 3.5% to 6.97%. Below the snapshot of G-Securities. One can check live RBI Retail Direct Scheme Yield here.
Also Read: TNPFC Offers 10.46% Yield – Is it safe to invest in this FD?
Should you invest in Government Bonds through RBI Retail Direct?
Many investors are well versed with investments in equity and mutual funds. There is still a lack of awareness among small investors for investments in G-secs. Government Bonds offer low returns, however, these are safe investments. One of the major concern is about liquidity. There are limited trades happening now, hence you might get a lower selling price if you want to sell them before maturity. Long term investors who are looking for safety as their primary objective can invest in G-sec through the RBI retail direct platform.
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Thanks. But YTM is different from Interest Rate. How to find out/determine whether YTM is more than Interest offered by Commercial Banks or NCDs?
Hello Rama Krishna, The title of the security already has interest rate except for Treasury bills / Dated Treasury Bills. These TB/DTB would not provide any interest as these are issued at discount price compared to bond price (e.g. Rs 1000 bond price is issued at Rs 950 and pays Rs 1,000 on maturity, Rs 50 is interest for the period).
Nice, detailed and clear cut article on RBI Retail Direct Scheme.
Many thanks for such a crisp and clear-cut note on the subject matter.
However, I would like to initiate a debate with your esteemed readers on/through your forum as to “suitability” or “why” should one retail individual investor invest in such GoI bonds/securities which give a taxable return/yield of maximum 7% on a 30 years investment period. For institutional investors/banks, it is a different game as they have to invest by law in SLR or other obligated avenues.
Thank you so much for posting this article. Thanks for considering Suggestion topic
Thanks Sivaraman
Good information. Useful.
Thank you
Dear Suresh Ji
G-Sec Bonds Minimum How many Years will be locking period and interest is floating rate ?
The Interest earned from the Bonds are again taxable ? Under the tax slab ?
Hello Veera, Lockin period = Tenure of the bond. However one can sell them on this to other buyers (like you sell shares on stock exchange). Yes are fixed income options, hence interest is taxable like any other FD interest where one need to add them to their income and pay income tax.