Total primary bond market subscription on Reserve Bank of India’s (RBI) retail direct platform rose over 110 percent on year, as on June 10, 2024, RBI data showed.
Experts said that this is on back of higher subscription in Treasury Bills (T-Bills) by retail investors on this platform amidst the surge in yields on this instrument over the last one year due to tight liquidity conditions in the banking system.
According to the data, total primary market subscription stood at Rs 4,694.42 crore, as on June 10, of which Rs 3,191.41 crore is in T-Bills. In a year-ago period, as on June 12, 2023, the total subscription stood at Rs 2,211.12 crore.
“We have been witnessing a surge in T-Bill demand from the retail segment during tight liquidity conditions as rates are competitive against short-term FD rates when liquidity is in deficit,” said Mataprasad Pandey, Vice President, Arete Capital Service.
V Ramachandra Reddy, Head, Treasury, The Karur Vysya Bank, said while bank deposit will allow up to 10 years, though the retail direct route, one can invest even for 50 years.
“At the current interest cycle, everyone feels that we are at the peak. So, they want to lock their funds at higher rates for longer periods. Of course, G-Secs (government securities) are offering sovereign guarantee,” Reddy said.
Also read: Retail investors shy away from G-sec secondary market on lack of awareness
Retail Direct Scheme
The RBI’s Retail Direct Scheme helps individuals to invest in government securities through a direct platform.
In the last one year, the cut-off yield on T-Bills in primary auction surged between 9-16 basis points (bps) across tenures. One basis point is one hundredth of percentage point.
According to the RBI data, the cut-off yield on 91-day T-Bill rose 9 bps, 182-day bills by 14 bps, and 364-day bills by 16 bps.
In the auction on June 19, the cut-off yield on 91-day T-Bill was at 6.8150
percent, 182-day at 6.9601 percent, and 364-day at 6.9800 percent.
What does the data say?
According to the RBI data, of the total primary market subscription, Rs 631.17 crore is in central government dated securities, Rs 376.19 crore in state government securities, Rs 298.61 crore in sovereign gold bonds, and Rs 197.03 crore in floating rate savings bond. This is as on June 10, 2024.
On the other hand, the traded volume in the secondary market stood at Rs 700.15 crore.
Retail investors traded central government securities worth Rs 620.15 crore, data showed. This was followed by Rs 49.29 crore in state government securities, and Rs 29.70 crore in T-Bills.
On the Negotiated Dealing System-Order Matching system (NDS-OM), there are two segments . The first is the standard lot segment, wherein trades happen in multiples of Rs 5 crore. For retail investors, there is an odd lot segment, where trades happen in multiples of Rs 10,000.
Reddy said that, in the G-Sec market also, if the lot size is reduced to a smaller quantum, retail participation will increase.
Launch of mobile application
The RBI, on May 28, launched the RBI Retail Direct mobile application, which was announced by the central bank as part of its bi-monthly Statement on Development and Regulatory Policies in April 2024.
The central bank said Retail Direct Mobile App will provide retail investors a seamless and convenient access to the retail direct platform and provide ease of transacting in G-Secs.
Experts are of the view that the newly launched application will increase retail participation.
“Easy and faster access to the T-Bill/G-Sec market through the newly launched app will further increase retail participation,” Pandey said.
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