RBI Retail Direct Scheme

In the month of November, 2021 The RBI Retail Direct Scheme was launched by Prime Minister Modi. It aims to improve individual investors’ access to the government bond market. RBI Retail Direct program is a one-stop solution that encourages individual investors to invest in government bonds.


This program allows individual investors to open and manage government securities accounts at RBI for free. Accounts opened for the custody of government securities are known as gilt accounts. These accounts are similar to bank accounts. However, for gilts, government bonds and treasury securities are credited and debited instead of money. Individual investors are not-professional investors and they sell as well as buy stocks and funds consisting of securities such as mutual funds and exchange-traded funds.

Currently, the Government Securities marketplace is ruled with the aid of using the institutional investors. They are massive marketplace actors which include mutual funds, banks and coverage companies with size of Rs five crores or more. Hence, there isn’t liquidity available for small investors.

About Government Securities

For the purposes of this scheme, government bonds are issued in the form of shares by crediting the SGL / CSGL account held by RBI, as defined in Section 3 (iii) of the Government Securities Act 2006. These include Government of India dated securities; Government of India Treasury Bills; State Development Loans (SDLs) and Sovereign Gold Bonds (SGB).

Significance of this scheme

Domestic savings can be funded with large sums of money if private clients are allowed to participate directly in the government’s securities market. The ease of trading government bonds is useful for individual investors. This will increase the participation of private clients in government bonds. The RBI Retail Direct scheme will help complete the government lending program from along with the relaxation of the mandatory holding period to maturity. As part of the state’s lending program, the Government of India from the market will borrow Rs 5.03 lakh crores.

Benefits of the scheme

With the introduction of Retail Direct, the general public can take a position directly in government securities. This is considered to be the safest asset class the government can offer. India is the third largest country in the world after the United States and Brazil, and individual clients may be directly exposed to the government bond market. This program provides a safe, easy and direct channel for investing in government securities. Individual investors need to open a custody account at RBI via the online portal. On the same portal, they can bid on the primary auction and buy and sell stocks on the market. There is no fee for the service. Payments can be made via both internet banking and UPI. Investor support facilities are available by phone, email, and online. This reduces the need for investors to keep their money safe, and the rate of return on gilts is comparable to or even better than bank deposit rates.

Eligibility to invest

Small investors need to maintain a savings account in India. One will need PAN number issued by income tax office and also needs a registered mobile phone number and a valid email ID. Non-resident Indians are also eligible to invest in this program. Retail Direct Gilt accounts can be opened jointly or individually.

Challenges faced by this scheme

Gilt investment for trading purposes, can still be a bit complicated for the average investor, so it is difficult to replace a dedicated investment trust expert. The intention of RBI is noble, but the recognition of the g-sec market is low. In terms of credit quality, Retail Direct is comparable to mutual funds or gilt funds with a portfolio of gilts and government promotional loans. Anyway, gilt assets below maturity are much lower. Depending on how quickly the consciousness spreads, this system will be started or exist only as an institution.