RBI Retail Direct Scheme

The Reserve Bank of India announces the activation of the RBI Retail Direct Scheme with effect from 12th November 2021. The Scheme was launched in virtual mode by the Hon’ble Prime Minister, Shri Narendra Modi. Reserve Bank of India-Retail Direct (RBI-RD) Scheme will bring the Government securities (G-sec) market easy reach of the common man by simplifying the process of investment. The scheme allows retail investors to buy and sell government bonds online. The present article briefs the RBI Retail Direct Scheme in detail.

RBI Retail Direct (RBI-RD) Scheme

As mentioned above RBI Retail Direct Scheme allows retail investors to buy and sell government securities (G-sec) online both in the primary and secondary markets.

Primary issuance of government securities: Investors can place bids as per the non-competitive scheme for participation in the primary auction of government securities and procedural guidelines for SGB issuance.
Secondary market: Investors can buy and sell government securities on NDS-OM (‘Odd Lot’ and ‘Request for Quotes’ segments).

According to details provided by RBI, these small investors can now invest in G-Secs by opening a gilt securities account with the RBI. The account opened will be called Retail Direct Gilt (RDG) Account.

Benefits of RBI Retail Direct Scheme

Retail investors (individuals) will have the facility to open and maintain the ‘Retail Direct Gilt Account’ (RDG Account) with RBI.

The investor can place non-competitive bids in Primary issuance of all Central Government securities (including Treasury Bills and Sovereign Gold bonds) as well as securities issued by various State Governments.
Under this scheme, the individual can also access the Secondary market through “NDS OM” - RBI’s trading system.
The investor will automatically receive any interest paid/maturity proceeds into his linked bank account on due dates.

RBI Retail Direct Online Portal

Under the Scheme, retail individual investors will be able to open a Retail Direct Gilt (RDG) Account with the Reserve Bank of India, using an RBI Retail Direct Online Portal. The RBI Retail Direct Online Portal will facilitate the following:

On-boarding of Retail Direct Investors,
Opening and management of RDG Accounts,
Facilitate participation in Non Competitive Bidding in Primary G-sec Auctions through the Clearing Corporation of India (CCIL)
Facilitate Investing in Sovereign Gold Bonds (SGBs) through CCIL
Facilitate NDS OM access to Retail Direct Investors for secondary market trading and settlement of such trades through CCIL.

Provide Investor Services such as:

Account Statement
Nomination Facility
Pledge/Lien
Gift Transactions

Facilitate Corporate Actions such as:

Coupon Payments
Coupon Payments

Eligibility Criteria to open the RDG account

As per the notification issued by the RBI on July 12, 2021, a retail investor can open the RDG account if they have the following:

Rupee savings bank account maintained in India;
PAN issued by the Income Tax Department;
Any officially valid document such as Aadhaar, Voter ID for KYC purposes;
Valid email ID
Registered mobile number
Non-Resident retail investors are also eligible to invest in Government Securities under Foreign Exchange Management Act, 1999 under the scheme
The RDG account can be opened singly or jointly with another retail investor who meets the eligibility criteria.

Documents Required for Retail Direct Glit Account

The individual can log in to RBI Retail Direct Portal to open a Retail Direct Gilt Account. The account can be opened online with just PAN, Rupee Savings Account, email id, and mobile number of the Individual. With these details, the individual needs to complete a seamless online KYC procedure to do registration under this scheme. Investors will have to follow the RBI KYC Guidelines while opening the RDG Account.

Procedure to Register on the Online Portal

Investors can register on the online portal by filling up the online form and using the OTP received on the registered mobile number and email ID to authenticate the information. Upon successful registration, ‘Retail Direct Gilt Account’ will be opened and details for accessing the online portal will be conveyed through SMS/e-mail. As mentioned above, RDG Account shall be available for primary market participation as well as secondary market transactions.

Applicable Fee for Opening Retail Direct Gilt Account

No fee will be charged for opening and maintaining a ‘Retail Direct Gilt account’ with RBI. No fee will be charged by the aggregator for submitting bids in the primary auctions. Fee for payment gateway etc., as applicable, will be borne by the registered investor.

Procedure for opening a Retail Direct Gilt Account

Eligible Investors will be allowed to register online on the Retail Direct Portal. The eligible retail clients can open RDG Account either singly or jointly; To open an account, the investor will have to furnish details like Full Name, PAN, Mobile Number, Email Address, Residential Address, Bank Account number, etc. The mobile number and email address will be authenticated using OTP as all further customer requests and services will be OTP-based.

The user will be provided with a tracking number to track application status;
Such Investors will be subject to Know Your Customer Guidelines. CCIL will adhere to the RBI KYC Direction 2018 while onboarding the Investor;
In the case of Joint Accounts, the KYC verification is proposed to be done for both the holders. In case of KYC failures, the individual can make a new application or resubmit the application after making necessary changes;
The Bank Account of the Customer will also be validated
Once the KYC is successful, a Retail Direct Gilt (RDG) Account will be opened in the name of the Investor(s);
Information related to account number, login id & password to access the Online Portal for participating in primary auctions and accessing other services will be made available to the Customer over mail.

It will be mandatory for the Investor to fill in the nomination details at the time of opening the account. The nomination details will be displayed online to the Investor and the Investor will have to accept the same by uploading and attaching a scanned image of the signature. The RDG Account will be available for primary market participation and well as secondary market transactions on NDS OM. Once the account is opened, retail investors can buy government securities in the primary market, where government bonds are issued for the first time, or buy/sell the existing government bonds in the secondary market. The official notification of RBI is enclosed here for reference: