How to Get Started on the RBI Retail Direct Scheme | Invest Your Money

PM Narendra Modi has launched RBI Retail Direct Scheme on 12the November 2021. This scheme motivates direct investors to invest in government securities. These government securities are known as G-Secs in short. Retail investors can participate directly in Govt. securities directly through this scheme.

RBI Retail Direct Scheme
RBI Retail Direct Scheme

This scheme will build interest and confidence in the Govt. securities retail marketing. Investors can open direct GILT or RDG account directly. If an investor is carrying an Indian bank account, an Indian pan card, valid ID proof such as an Aadhar card, Voter card, and mobile number, can open an RDG account on the RBI’s investment portal www.rbiretaildirect.org.in and can register for RBI Retail Direct Scheme.

What is RBI Retail Direct Scheme

The Central bank has started a new scheme named RBI Retail Direct Scheme (www.rbiretaildirect.org.in) which is an online investment portal where individuals can directly invest in G-Secs. Direct investors have been divided into two categories, i.e. G-Secs Direct and RDG Direct. With this scheme, there is no requirement of investing through a registered intermediary.

Section 2: Required details of Investors

The following details need to be checked by the investors before investing in the G-Secs Direct.

i) Indian Bank Account

ii) PAN Card

iii) Indian Identity Proof

iv) Payment Authority ID

v) Mobile Number

vi) Aadhar Card

Section 3: Qualifications of Investors

The following are the criteria for opening an investor account in G-Secs direct.

How to register for RBI Retail Direct Scheme

Step 1: Visit www.rbiretaildirect.org.in

Step 2: Click on the ‘Free Registration’ tab

Step 3: Select Account type “ Single” or “Joint Account”, Enter Mandatory Details, such as Pan number, Mobile Number, Email Id.

RBI Retail Direct Scheme
RBI Retail Direct Scheme

Step 4: You will receive email instructions about transactions. Click on the ‘Confirm’ button to complete the transaction. You can start investing immediately.

RBI Retail Direct Scheme
RBI Retail Direct Scheme

Step 5: After registration, you will receive instructions about transactions. Click on the ‘Confirm’ button to complete the transaction. You can start investing immediately.

Step 6: The sender can collect your G-Sec order after one week from the date of receipt of the order.

Step 7: You can withdraw up to 100% of the G-Sec amount. The withdrawal would be in the order of investment made.

Who can invest in RBI Retail Direct Scheme

The scheme is open for all eligible investors who are citizens of India and hold an Indian bank account with a minimum balance of Rs. 5000 or maximum balance of Rs. 25000. On the opening of an RDG account, the individual should also fill in the personal details, PAN, bank account details, etc. on the Indian rupee income tax return form.

RBI Retail Direct Scheme
RBI Retail Direct Scheme

The scheme will be available for the existing investment accounts of registered Specified Undertaking of Unit Trust of India (SUUTI) schemes or the individual investor holding an account of an exempted mutual fund company with Rupee currency account/limited/cash. The investor need not withdraw the existing investment from the AMC after the opening of RDG/GILT Account.

Income Tax deductions under RBI Retail Direct Scheme

There are certain tax benefits for taxpayers who participate in this scheme. Below are the details of tax benefits that are provided under RBI Retail Direct Scheme.

Deduction under Section 80C

Before adding the total deposits towards the RDG account as per RBI instructions, an exemption under Section 80C of the Income-tax Act, 1961 can be taken. A deduction can be taken up to Rs. 1.5 lakh from the total amount deposited by an individual. The deposits made for retail investors can be made in lump sums or in tranches based on their requirements.

Under section 80C, no deduction is allowed up to Rs. 1 lakh. However, for RDG contribution above Rs. 1 lakh, an exemption is allowed up to Rs. 50,000. Moreover, there is no limit on the deposits made under this section.

Benefits of investing through RBI direct retail scheme

• Direct distribution helps in a lower cost of investment.

• Direct G-Sec investments help in buying securities on the yield of National Company Law Tribunal (NCLT) petitions or bond auctions.

• It also reduces interest rate risk for retail investors.

• The retail investors can buy G-Secs at better rates and also avoid brokers and banks charges.

• If an investor buys at a higher yield, the investor can choose to invest the principal back on maturity or reinvest the principal at a higher yield.

• However, if the yield of an individual stock or mutual fund goes up and the investor chooses to reinvest the principal back in the higher-yielding mutual fund or stock, the investment would have to pay a higher minimum balance or annual fee.

Conclusion

There is a trust deficit in India’s economy due to various scandals. However, the RBI is trying to repair that trust by launching the RBI Retail Direct scheme. This scheme will encourage more and more Indians to invest in government securities and strengthen the trust of the Indian population. At the same time, it will also help the Indian economy to grow at a faster rate.

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