Leading stock exchanges BSE and NSE have announced the launch of online platforms to bring retail investors’ participation in government securities.
The exchanges will act as facilitators for non-competitive bidding under RBI’s auction for government securities (G-Sec) and treasury bills (T-Bills).
The platform will allow retail investors to invest in government securities and hold them in existing demat accounts.
In a statement, the bourse said that the launch of NSE’s e-Gsec platform will provide investors an opportunity to participate in G-Sec to be auctioned on April 26 and the subsequent weekly auctions of G-Sec and treasury bills (T-Bills).
Separately, the BSE said it would offer an online bidding platform ‘NCB-GSec’ for collecting bids from members on behalf of their clients.
The move comes after the Reserve Bank of India (RBI) introduced non-competitive bidding facility to encourage retail participation in the primary market for government securities.
The Union Budget 2016-17 had announced that RBI will facilitate retail participation in the primary markets through stock exchanges.
RBI conducts auction for G-Sec and T-Bills on a weekly basis where 5 per cent of the notified amount is allotted for eligible investors under the scheme for non-competitive bidding facility.
“Non-competitive bidding through exchanges is an efficient mechanism for delivering government securities to retail clients. Promoting retail participation in government securities benefits both the issuer and the investor,” NSE MD and CEO Vikram Limaye said.
“For the government, it provides a diversified investor base and for retail investors an ability to diversify their investment portfolio to an asset class providing capital protection and decent returns. NSE will continue to offer simple retail products leveraging on its robust technology and retail distribution capabilities,” he added.
Investments in government securities are one of the safer investment options available to retail investors as these are risk free instruments and provide portfolio diversification and are available for longer investment durations.