Explained: What are the two initiatives of the RBI that PM Modi has launched?

The RBI Retail Direct Scheme is aimed towards enhancing access to the government securities (G-Secs) market for retail investors, while the Reserve Bank - Integrated Ombudsman Scheme aims to improve the grievance redress mechanism for resolving customer complaints against entities regulated by RBI.

Prime Minister Narendra Modi during the launch of the two RBI initiatives on Friday. (Photo: PTI)

5 min readNew DelhiNov 13, 2021 08:13 AM IST First published on: Nov 12, 2021 at 02:35 PM IST

Prime Minister Narendra Modi on Friday launched two customer-centric initiatives of the Reserve Bank of India (RBI) — the RBI Retail Direct Scheme and the Integrated Ombudsman Scheme. With this, India has opened up the government bond market for retail investors.

“RBI has been leveraging technology & innovation for enhancing the efficiency of its services. RBI’s developmental role is focused on further deepening of financial inclusion and undertaking people centric initiatives,” RBI Governor Shaktikanta Das, who was also present during the virtual launch of the scheme said.

Das had first flagged this initiative in a February policy review while calling it a “major structural reform”. In July, the central bank said investors will have access to bidding in primary auctions as well as the central bank’s trading platform for government securities called Negotiated Dealing System-Order Matching Segment, or NDS-OM.

So, what exactly are these two schemes about? We explain.

RBI Retail Direct Scheme

The scheme allows retail investors to buy and sell government securities (G-Sec) online, both in the primary and secondary markets. According to details provided by RBI, these small investors can now invest in G-Secs by opening a gilt securities account with the RBI. The account opened will be called Retail Direct Gilt (RDG) Account.

According to notification issued by the RBI, a retail investor can open the RDG account if they have following — a Rupee savings bank account maintained in India, PAN card, any official valid document such as Aadhaar, Voter ID for KYC purpose, a valid email ID and a registered mobile number.

Participation and allotment of securities will be as per the non-competitive scheme. Only one bid per security is permitted. On submission of the bid, the total amount payable will be displayed. Payment to the aggregator/receiving office can be made through using the net-banking or UPI facility from the linked bank account, whereby funds will be debited at the time of submission of bids on the portal.

Registered investors can access the secondary market transaction link on the online portal to buy or sell government securities through NDS-OM.

For buying of government bonds, payment can be made through either of the following ways: before start of trading hours or during the day, the investor should transfer funds to the designated account of CCIL (Clearing Corporation of India NDS-OM). Based on the actual transfer/success message, a funding limit (buying limit) will be given for placing the ‘Buy’ orders. At the end of the trading session, any excess funds lying to the credit of the investor will be refunded.

RBI Integrated Ombudsman Scheme

This will help in improving the grievance redress mechanism for resolving customer complaints against RBI’s regulated entities. According to the PMO, the scheme is based on “One Nation-One Ombudsman” with one portal, one email, and one address for the customers to lodge their complaints.

Customers will be able to file complaints, submit documents, track status, and give feedback through a single email address. There will also be a multilingual toll-free number that will provide all relevant information on grievance redress.

Now, there will be a single point of reference for customers to file their complaints, submit the documents, track status, and provide feedback. Under this scheme, there will be a multilingual toll-free number that will provide all relevant information on grievance redress and assistance for filing complaints. The redressal will continue to be cost-free for customers of banks and members of the public.

Importance of the schemes

The move comes at a time when rising inflation adds pressure on the RBI to lift rates. Tighter monetary policy is likely to weaken the demand for bonds, making it challenging for the government to execute its near-record borrowing program. Other emerging-market nations in Asia, like the Philippines, have also sought to raise funds from citizens to battle the pandemic.

Yields on India’s benchmark 10-year government bonds have risen in the past five months amid surging crude oil prices. They eased in November after the Narendra Modi-led government cut tax on retail fuels.

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