After a lukewarm response to its earlier scheme to allow small investors to invest in government securities through stock exchanges, the RBI now allows direct investments.
Investing in government securities is set to become easier. In the RBI monetary policy announcement made earlier today, the RBI Governor Shaktikanta Das said that retail investors will be given online access to the government securities market both primary and secondary - along with the facility to open their gift securities accounts with the RBI. This facility will be called Retail Direct. The details of the facility will be announced later. This is not the first time that the RBI has encouraged retail investors to invest in g-secs. So far, there has been a lukewarm response. But experts predict that the latest move ought to bring in more retail investors in the g-secs market.
These are debt instruments issued by the RBI, on behalf of the central government. The state governments also raise money by issuing such instruments; those are called State-Development loans.
G-secs come in varying tenures; from 6 months to up to 40 years. Interests are generally paid twice a year and taxable at your income tax slab rates. The 10-year govt. security bond yield is a widely tracked number by market participants to assess the long term interest rate movement in the economy. It is typically referred to as benchmark security. The 10-year g-sec current yield is 6.11%.
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