During the Monetary Policy Committee announcements on Friday, RBI Governor Shaktikanta Das said that retail investors could now open gilt accounts with the central bank. The Governor said that this move would broaden investor base and provide retail investors with enhanced access to participate in the government securities market.
"The central government and the Reserve Bank have taken several measures to encourage retail investment in Government Securities. These include introduction of non-competitive bidding in primary auctions, permitting stock exchanges to route primary purchases and allowing a specific retail segment in the secondary market. In continuation of these efforts, it is proposed to provide retail investors with online access to the government securities market -- both primary and secondary -- directly through the Reserve Bank ('Retail Direct')," said Governor Das.
This structural reform places India amongst one of the few countries to have similar facilities. This, along with bonds held-to-maturity (HTM) relaxation will help the government in its borrowing programme in 2021-22.
"The Indian economy is poised to move in only one direction and that is upwards. It is our strong conviction, backed by forecasts, that in 2021-22, we would undo the damage that COVID-19 has inflicted on the economy. After the chaos and despair of the year gone by, through which we have sailed together and shall continue to sail ahead," said RBI Governor.
WHAT ARE GILT ACCOUNTS
Gilt accounts are opened and maintained for holding government securities by an entity or a person including a person who resides outside India with a 'custodian' as permitted by the RBI to open and maintain Constituent Subsidiary General Ledger account with the public debt office of the apex bank. For persons residing outside India, gilt account activities are governed by the Foreign Exchange Management Act, 2000.