MUMBAI: The RBI said on Friday that retail investors would very soon be able to directly buy and sell government securities (G-Secs).
A difficult proposition now, once it is allowed, it could open up another avenue for retail investors to look at government-guaranteed, low-risk products for long-term investment. For the government, it means another set of investors to support its borrowing plan over the long run, though it would take time to pick up, industry players said.
G-Secs can help govt borrow big, deepen mkt
On Friday, RBI said that along with the government, it would encourage retail investment in GSecs, also called gilts. “This includes introduction of noncompetitive bidding in primary auctions, permitting stock exchanges to route primary purchases and allowing a specific retail segment in the secondary market…to provide retail investors with online access to the G-Sec market—both primary and secondary—directly through the RBI (Retail Direct),” the policy statement said. RBI sources said the platform could be launched as early as April.
In July last year, Sebi chief Ajay Tyagi had also proposed opening up of this market to retail investors. Tyagi had proposed to first handhold the new demat account holders into the less-risky G-Secs and then, once they familiarised themselves with investing in these guaranteed assets, they could be helped to invest in other securities like stocks and commodities as well.
“The issuance of GSecs in demat form, apart from easing the process of making investments by non-institutional participants in these securities, may also ease the government’s borrowing process,” he had said. According to Ujjwal Jain, CEO & founder, WealthDesk, a retail broking house, the government’s large borrowing plan has got a new source, which will also help deepen this market.