Primary market subscription on RBI retail direct platform rises 78% YoY in November

RBI Retail Direct

Total primary market subscription by the retail investors on the RBI retail direct platform jumpd 78.38 percent on-year in November.

According to Reserve Bank of India's (RBI's) retail direct data, total primary market subscription by retail investors stood at Rs 5,624.85 crore as on November 18, compared to Rs 3,153.31 crore as on November 20, 2023.

The majority of the subscription by the retail investors in the primary market was in treasury bills. As per data, it stood at Rs 3,888.36 crore as on November 18, 2024, which registered a growth of just over 82 percent, from Rs 2,135.67 crore as on November 20, 2023.

This was even after the cut-off yield on treasury bills have fallen in last one year due to better liquidity conditions, increase in demand from investors, and unprecedented cut in treasury bills supply.

Money market expert said that even though the treasury bills yields have fallen in primary market, the returns are better as compared to long-term dated securities because the spread between long term and short-term debt instruments is very narrow now.

The spread between 10-year and treasury bills is between 26-42 basis points (bps) across tenures.

"As the yield curve gets flat the propensity to keep the funds at shorter end increases. HNIs and other bulk depositors prefer the safety of t bills after it has become readily available through auctions on the platform," said Alok Singh, Group Head Treasury, CSB Bank.

The RBI’s Retail Direct scheme helps individuals invest in government securities through a direct platform.

Apart from T-bills, central government dated securities also witnessed a lot of demand from the retail investors on RBI retail direct platform. It stood at Rs 684.94 crore as on November 18, 2024, as compared to Rs 540.41 crore as on November 20, 2023.

This was followed by Rs 405.06 crore investment in state government securities, Rs 347.88 crore in floating rate savings bond, and Rs 298.61 crore in sovereign gold bonds as on November 18, 2024.

On the other hand, in the secondary market, even though there was surge in investment, volumes remain lower compared to primary market investment.

As per data, total traded volumes in the secondary market stood at Rs 941.57 crore as on November 18, 2024, as compared to Rs 501.29 crore as on November 20, 2024.

The lower liquidity in the odd lot segment in the secondary market is said to be one of the main reasons for the muted participation by retail investors according to experts.

On the Negotiated Dealing System-Order Matching system (NDS-OM), there are two lot segments where trades happen. 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.

NDS-OM is a screen-based electronic anonymous order matching system for secondary market trading in Government securities. The standard lot segment is generally used by institutional investors in the secondary market, where liquidity is higher, for trades.

In April 2024, the RBI to ease the investment in government securities launched the Retail Direct Mobile App.