GSecs for Retail Investors

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Retailing the G-Secs means taking the G-Secs market to retail investors. Today, the G-Secs market in the country is predominantly inhabited by wholesale players like Banks, Financial Institutions, Primary Dealers, FIIs, Mutual Funds, Insurance Companies, Brokers, Pension Funds, etc. For vibrant G-Secs market, it is necessary to attract retail investors so that they can participate in the market that will bring them a reasonable return with no credit risk. Recently, with the introduction of Government Securities Act, 2006 and the Government Securities Regulations, 2007 (See Postings on the homepage of our website), Government Securities have become more investor friendly while giving attractive returns for a longer duration to investors.

Government Securities can also be held in demat form. CSGL facility was started with this objective so that any person or a body corporate, etc. could hold their portfolio of Government Securities with RBI through an intermediary like Bank or a Primary Dealer. Now they can also be held through a D.P.

To safeguard the interest of small investors who may not have the sophistication in bidding in auction and to save them from ‘winner’s curse’, RBI has also introduced a non-competitive bidding facility for retail investors in G-Secs. Through this non-competitive bids are accepted up to 5 percent of the notified amount in the specified auctions of dated securities. Retail investors when they bid through this system get assured allotment (may be partial) at the weighted average price of the winning bids.

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