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This will broaden the investor base and provide retail investors with enhanced access to participate in the government securities market, RBI said.
For improving liquidity and greater participation of retail investors, Reserve Bank of India (RBI) today announced that retail investors can now directly buy bonds from primary and secondary market.
RBI Governor Shaktikanta Das said in the monetary policy announcement that retail investors will be allowed to open gilt accounts through the ‘Retail Direct’ platform. The account will give retail investors an opportunity to invest in government bonds directly through RBI. Government securities are sovereign bonds, which are backed by the government.
In his speech the RBI Governor said,” This will broaden the investor base and provide retail investors with enhanced access to participate in the government securities market. This is a major structural reform placing India among select few countries which have similar facilities. This measure together with HTM (Held To Maturity) relaxation, will facilitate smooth completion of the Government borrowing programme in 2021-22.”
Following Budget 2021, debt market reacted negatively with yields rising. Bond market investors got worried with fiscal deficit pegged at 9.5% and 6.8% of the GDP for FY21 and FY22 respectively.
Moreover, government has announced it plans to borrow Rs 12-lakh crore FY22 .