RBI to give small investors direct access to Government Securities
Part of: GS Prelims and GS- III – Economy
- The RBI has informed that it will give small investors direct access to its government securities (G-sec) trading platform.
- 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:
- treasury bills – short-term instruments that mature in 91 days, 182 days, or 364 days, and
- dated securities – long-term instruments, which mature anywhere between 5 years and 40 years.
Do you know?
- A “Gilt Account” means 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.