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RBI to give small investors direct access to Government Securities

  • IASbaba
  • February 9, 2021
  • 0
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RBI to give small investors direct access to Government Securities

Part of: GS Prelims and GS- III – Economy

In news 

  • The RBI has informed that it will give small investors direct access to its government securities (G-sec) trading platform.

Key takeaways 

  • Retail investors can directly open their gilt accounts with RBI, and trade in government securities. 
  • It is being described as a major structural reform. 
  • The two key categories are:
  1. treasury bills – short-term instruments that mature in 91 days, 182 days, or 364 days, and
  2. dated securities – long-term instruments, which mature anywhere between 5 years and 40 years. 

Do you know? 

  • A “Gilt Accountmeans an account opened and maintained for holding Government securities, by an entity or a person including a person resident outside India’ with a “Custodian” permitted by the RBI. 
  • G-secs are debt instruments issued by the government to borrow money.

Important value additions 

  • Like bank fixed deposits, g-secs are not tax-free.
  • They are generally considered the safest form of investment because they are backed by the government. 
  • So, the risk of default is almost nil.
  • However, they are subject to fluctuations in interest rates. So, they are not completely risk-free.

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