The National Stock Exchange (NSE) on Tuesday announced the launch of its e-Gsec platform which will allow retail investors to invest in government securities and hold them in existing demat accounts.
"We have launched "e-Gsec" platform for facilitating the non-competitive bidding in Government of India Dated Securities (G-Sec) and Treasury Bills (T-Bills). This will allow retail investors to invest in government securities and hold them in existing demat accounts," a release said here.
The government issues securities in order to borrow money from the market. Securities are offered to investors through auctions which is competitive and on-competitive. The large investors, such as, banks, primary dealers, financial institutions, mutual funds, insurance companies, etc generally participate in the competitive auctions by placing bids directly on the Reserve Bank of India (RBI).
The Union budget 2016-17 had announced that RBI will facilitate retail participation in the primary markets through stock exchanges.
The RBI conducts auction for G-Sec and T-Bills on a weekly basis where 5 per cent of the notified amount is allotted for eligible investors under the scheme for non-competitive bidding facility.
Today's launch of NSE's e-Gsec platform provides investors an opportunity to participate in the G-Sec auction of April 26 and the subsequent weekly auctions of G-Secs and T-Bills, the release said.
According to Vikram Limaye, managing director and chief executive officer, NSE, non-competitive bidding through exchanges is an efficient mechanism for delivering government securities to retail clients.
"Promoting retail participation in government securities benefits both the issuer and the investor. For the government it provides a diversified investor base and for retail investors an ability to diversify their investment portfolio to an asset class providing capital protection and decent returns," he said.
Limaye added that NSE will continue to offer simple retail products leveraging on its robust technology and retail distribution capabilities.
Investments in government securities are one of the safer investment options available to retail investors. These risk-free instruments provide portfolio diversification and are available for longer investment durations.
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