Budget proposes retail investors’ participation in G-Sec market

New Delhi, July 5 (IANS) Retail investors will soon get a chance to invest in government securities (G-Secs) and treasury bills with the Union Budget proposing a new mechanism to attract individual investors to the bond market.

While presenting the Budget in the Parliament on Friday, Finance Minister Nirmala Sitharaman announced that the government will take necessary steps to bring retail investors to the bond market in consultation with the RBI and market regulator SEBI.

"For this purpose, inter-operability of RBI depositories and SEBI depositories would be necessary to bring about seamless transfer of treasury bills and government securities between the RBI and depository ledgers," the Finance Minister said.

This would make it easier for retail investors to invest in treasuries and government bonds.

"Efforts made by the Reserve Bank will need to be supplemented with further institutional development using the stock exchanges," Sitharaman said, indicating the government's intent to initiate the process soon.

Presently, buying and selling of G-Secs and treasury bills is a cumbersome process for retail investors as their purchases do not get directly deposited into demat accounts, which is the case for equity sale and purchase. Government securities purchases are reflected in the Securities General Ledger account and getting it transferred from there to demat account is a cumbersome process.

Last month, the RBI asked the stock exchanges to act as facilitators or aggregators of bids of their stockbrokers or other retail participants, when it met for the second time to decide on the monetary policy in financial year 2019-2020.