the US and Brazil, to provide retail participants with direct exposure to the government bond market. Announcing the initiative, Prime Minister Narendra Modi noted that the new scheme will increased the availability of funds for the government to invest in the needs of the country, while ensuring safety of the common man’s investment. As the highest asset class that a sovereign can offer, there will be no credit risks involved in government securities.
“So far, our middle class and senior citizens had to go to banks, insurance firms or mutual funds to invest in government securities. Now, they can invest directly and safely from the convenience of their homes. This is the best way to invest,” the Prime Minister said. “The ease of investment and safety will develop the wealth of the nation.”
Under the scheme, retail investors can invest in primary and secondary market government securities by using an online portal to open a retail direct gilt (RDG) account with the RBI. The minimum investment is said to be ₹10,000, while maximum amount an investor can invest per security is ₹20 million (US$269,000).
“The retail direct scheme seeks to widen the investor base for government securities by creating an ecosystem whereby retail investors can easily participate in the government securities market, which is so far dominated by institutional investors. By doing so, India is setting an example in democratisation of the government securities market,” RBI Governor Shaktikanta Das said.
