RBI Retail Direct platform for Government Securities (G-secs)

RBI Retail Direct platform for Government Securities (G-secs)

Subject – Economy

Context – G-Sec Retail Direct: Mkt players seek easy KYC, interoperability

Concept –

• For effective implementation of the RBI Retail Direct platform for Government Securities (G-secs), market participants are pushing for tweaks in the rules, seeking relaxation in KYC norms, interoperability for buyers and a clarity on whether bonds bought through the retail direct platform must be held in demat form.
• Investments done directly by retail investors in G-sec may also not reflect in the single record of all financial assets, as being envisaged under the account aggregator guidelines.
• The Reserve Bank of India in July unveiled a scheme allowing retail investors to directly participate in the G-sec market. They can open and maintain a ‘Retail Direct Gilt Account’ (RDG Account) with the RBI through a portal, which will also provide access to primary issuance of G-Secs and the secondary market as well.
• G-Secs held in demat mode are reflected in the CSGL or Constituent Subsidiary General Ledger (SGL) account of the depositories.
• In 2005, RBI created its online platform, Negotiated Dealing System (NDS-OM), operated by the Clearing Corporation and Indian Ltd (CCIL), for issue of G-Secs.
  • At present, the RBI’s Core Banking Solution (E-Kuber), trading platform (NDS-OM), depository system (PDO/SGL) and clearing and settlement by CCIL, together provide a comprehensive, seamless and end-to-end platform for trading and settlement of G-Secs for banks and select institutional investors on T+1 basis with settlement guarantee.
• In 2005, RBI created its online platform, Negotiated Dealing System (NDS-OM), operated by the Clearing Corporation and Indian Ltd (CCIL), for issue of G-Secs.
• At present, the RBI’s Core Banking Solution (E-Kuber), trading platform (NDS-OM), depository system (PDO/SGL) and clearing and settlement by CCIL, together provide a comprehensive, seamless and end-to-end platform for trading and settlement of G-Secs for banks and select institutional investors on T+1 basis with settlement guarantee.
• As RBI is not a Financial Information Provider under its Account Aggregator Directions, the investment held in this account will not reflect in the single record of all financial assets.
• The scheme is also silent on whether G-Secs held in this retail account in SGL mode can be demated.

To know about G-Secs, please click here.