how retail investors can make profit from RBI’s Retail Direct scheme | RDG scheme benefits

Everyone, who is doing trading or investment into the share or equity market, has once in a awhile thought of entering into the capital market, but it wasn’t possible because of insufficient funds until now, working on this issue RBI has come up with RBI Retail Direct facility under which now a retails individual can now invest into the capital market means to be specific into governments securities market just link institutional investors.

The RBI Retail Direct scheme was announced by the RBI in February 2021 as the start of the financial year 2021.

Let us discuss one by one what is the scheme exactly and how it is going to be helpful to retail investors:

What is RBI’s Retail Direct scheme..?

Rbi announced this scheme with the purpose of increasing the involvement of retail investors through the primary or secondary market into the government securities market.

How to buy govt securities under this scheme?

For purchasing the government securities, the retail investors need to open one account directly with the RBI, which will be called a gilt securities account or the Retail Direct account of the retail investors. This account will be the single point solution for all retail investors to invest in the primary or secondary government securities market.

How to open the Retail Direct Gilt (RDG) account with the RBI?

The retail investors can open and maintain the account with the help of a dedicated portal, soon to be provided by the RBI and the account will be having zero charges for account opening and maintenance with the RBI, only the payment gateway fees need to be paid by the retail inventors during all the transactions.

What are the documents required from the individual investors for opening RBI’s Retail Direct Gilt (RDG) account?

The individual investor needs to open one rupee savings bank account by any government or private bank, which needs to be maintained in India, along with them a PAN (permanent account number) or any other officially valid KYC documents with working email id and mobile number is required to register and maintain under the retail direct gilt schemes.

What documents are required from “NRI” individual investors for opening RBI’s Retail Direct Gilt (RDG) account?

The NRI can open an account with the RBI for the RDG Scheme after complying with all the rules under the Foreign Exchange Management Act, 1999 of the government of India.

What are other benefits of RBI’s Retail Direct Gilt (RDG) account?

With the help of this RDG account, the retail investors can track the price volatility and buy or sell the governments, securities with the help of a screen-based monitoring system called NDS-OM, the negotiated dealing system – order matching segment also called as NDS-OM works as price charts of sellers and buyers along with electronic order matching system for both the buyers and the sellers of the government’s securities.

What is the commencement date of RBI’s Retail Direct scheme?

As of now, all the required information is made available by the RBI, but the date of commencement of the scheme is not out yet and it’s expected to be out soon as said by RBI on 12 July.

Any retail investor in his own name or in combined format can open the account with the RBI to get the benefits of the Retail direct gilt scheme.

How much minimum to maximum amount is allowed for investment through this scheme?

Presently, The amount allowed for the investment is not made available by the RBI and it will be made public once the scheme is commented in the public domain.

Which all securities are allowed for trading in the securities market by RBI under the Retail Direct scheme?

The securities to be traded include treasury bills issued by the Government of India, Government of India dated securities, sovereign gold bonds meaning SGBs, and the state development loans also called SDLs.

How does the actual transaction happen under the RBI’s Retail Direct scheme from buyers to sellers? 

Just as an equity investor can hold shares with a depository participant in Demat form, he can also hold government securities in an account with a bank which is opened by the retail investor as a part of the required documents for RDG scheme or primary dealer. Securities kept on behalf of customers by banks or primary dealers are kept in a separate constituent subsidiary general ledger account also called an SGL account with the RBI. Thus, if the bank or the primary dealer buys security for his client, it gets credited to the constituent subsidiary general ledger (CSGL)account of the bank or primary dealers with the RBI. 

How will the trades happen in the primary securities market for the RDG scheme ??

In the primary market, only a single bid for each security will be allowed. Payment can be made with the help of UPI or other ways of net banking. Funds will be blocked once the submission of the bid is done successfully, and will amount will be debited depending upon the allotment. This will be done by the payment aggregators or banks.

How will the trades happen in the secondary securities market for the RDG scheme  ??

In the secondary market case, the retail investors should transfer funds before the start of the trading hours or during the day, to that particular account of CCIL called as Clearing Corporation of NDS-OM  with the net-banking or the UPI from the bank account associated with the RBI’s RDG scheme. Based on the final transfer or the success confirmation, a funding limit means the Buying Limit will be given for making ‘Buy’ orders. At the end of the trading hours, any excess amount remaining in the credit balance of the investor will be refunded to the retail investor…

This is it for now, if you like the article then you can share the article on FacebookInstagram, and Twitter, and for any suggestions views, you can comment on us till then keep reading keep growing.

Leave a Comment