As a part of the February 2021 monetary policy, Prime Minister Narendra Modi announced the ‘RBI Retail Direct Scheme’, allowing retail investors to buy and sell government securities (G-sec) online. This means that as an investor, you can now directly buy treasury bills, sovereign gold bonds (SGB), dated deposits, state development loans (SDLs), and more from the primary and secondary market. The primary objective of the RBI Retail Direct Scheme is to make government securities accessible for all investors. Therefore, as an investor, you now have an option to invest in mutual funds and buy safe government securities to reduce your overall portfolio risk.
Here is everything you should know about RBI Retail Direct Scheme:
What is RBI Retail Direct Scheme?
The RBI Retail Direct Scheme is a one-stop, safe and straightforward solution allowing investors to buy and sell government securities (such as treasury bills, SGB, SDLs, and more) online in the primary and secondary market. As an investor, you only have to create a gilt security account with the RBI (Reserve Bank of India) to invest in government securities. This account is also known as Retail Direct Gilt (RDG) Account. The account creation and transactions are executed on the online portal.
What are the documents required to open an RDG account?
To open an RDG account, you should have the following documents:
- An Indian savings bank account
- PAN card
- Official Identity document, including Aadhaar Card, Voter ID, etc.
- Email ID and registered mobile number
- Bank account details
- Scanned copy of your signature
How to open an RDG account?
You can open an RDG account independently or jointly with another eligible retail investor by registering on the online portal.
- On the portal, fill out the online form with your full name, PAN card, Aadhaar card, email address, savings bank account number, etc. For a joint RDG account, the PAN card of both holders is mandatory.
- Specify a login name, and once done, authenticate the OTP received on your registered mobile number and email ID.
- After authentication, you will receive a reference number to track your application. Save the number.
- Post this initiate your KYC (Know Your Customer) process. For joint accounts, KYC for both account holders is mandatory.
- Fill in the nominee details of your account.
- After that, a token amount is deducted from your RDG linked savings bank account.
- After deduction and the KYC process, the RDG account is active in your name.
Once registered, you will receive the access details of your RDG account via email and SMS on your email ID. If you are a non-resident retail investor, you can also invest in government securities under the FEMA (Foreign Exchange Management Account), Act 1999.
If your KYC fails, you can resubmit your application after excluding possible errors.
Overall, the Retail Direct Scheme aims to benefit retail investors by giving them access to low-risk, attractive interest-paying securities. By including investment options like mutual funds and government securities in your portfolio, you can create an optimally diversified investment portfolio, reducing your overall risk and improving returns.
If you want to invest in mutual funds, you can use the Tata Capital Moneyfy App to find the best mutual funds as per your risk appetite. To further lower your investment risk, log in to the Moneyfy app and use the SIP (Systematic Investment Plan) mode to invest in the mutual fund scheme of your choice.