New Delhi, January 16
In a major reform initiative for broadening the government-debt market by roping in the small investor, the Centre today flagged off the much-awaited retail trading in gilt-edged government securities (G-Secs) and corporate debts, thereby offering the option to individuals to invest money in safest of instruments with a minimum monetary denomination of as low as Rs 1,000.
Small investors will now have the option of using the 150 G-Sec schemes as a saving instrument. The G-Sec market in India is estimated to be at the tune of Rs 6,50,000 crore.
While it is not yet known whether retail trade in G-Secs will increase the yield, experts opine that the returns from G-Secs will be better than those of bank fixed deposits.
Treasury Bills and state government debt instruments, however, have been kept out of the retail trading domain. The government said these would be opened up for retail trade in a phased manner.
Tax on interest payments would not be deducted at source and individual investors would be entitled to a tax exemption of Rs 3,000. The government also
announced its plans to introduce retail trading in interest rate derivatives shortly.
Union Finance Minister Jaswant Singh threw open the scheme by purchasing 20 units of securities which carry an interest rate of 11.10 per cent. It matures in April and has a face value of Rs 100. “This has opened a new investment opportunity for retail and small investors. It (G-Secs) is a secured investment,” he said.
The Deputy Governor of the RBI, Dr Rakesh Mohan, said although the prices of G-Secs would vary according to the interest rate variations,”being sovereign papers, it will be the safest and it will be secured till maturity”.
Retail investors can sell and purchase G-Secs and corporate debt papers from the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and Over-the-Counter Exchange of India (OTCEI) through the 10,000 terminals spread across over 400 cities.
