G-secs: RBI unveils Retail Direct Scheme

What is the News? 

The Reserve Bank of India(RBI) has announced the launch of the RBI Retail Direct scheme. 

About RBI Retail Direct Scheme: 

• RBI Retail Direct Scheme is a one-stop solution to facilitate investment in government securities (G-secs) by individual investors. 

• Under the scheme, retail investors (individuals) will have the facility to open and maintain the ‘Retail Direct Gilt Account’ (RDG Account) with the RBI. 

• Gilt Account means an account opened and maintained for holding Government securities. 

• This RDG account can be opened through an online portal provided for the purpose of the scheme. 
• The online portal will then allow the registered users access to primary issuance of G-secs and access to NDS-OM (Negotiated Dealing System — Order Matching (NDS-OM).

What are Government Securities(G-secs)? 

• A Government Security(G-Sec) is a tradable instrument issued by the Central Government or the State Governments. It acknowledges the Government’s debt obligation.  
• Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one year or more).  
• In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities which are called the State Development Loans (SDLs). 

What are NDS(Negotiated Dealing System)? 

• The Negotiated Dealing System or NDS is an electronic trading platform operated by the RBI to facilitate the issuing and exchange of government securities and other types of money market instruments.  
• The goal was to reduce inefficiencies stemming from telephone orders and manual paperwork while increasing transparency for all market participants