NSE facilitates primary subscription for retail investors in SDL auctions

National Stock Exchange of India Ltd (NSE) on Monday introduced facilitation of subscription in state development loans (SDLs) through its e-Gsec platform to enable retail participation through the non-competitive bidding route.

SDLs are dated securities issued by state governments through a normal auction similar to the auctions conducted for dated securities issued by the central government. The Reserve Bank of India (RBI) conducts auctions for SDLs on a weekly basis where 10 per cent of the notified amount is allotted for eligible investors under the scheme for non-competitive bidding.

The interest on SDL is received at half-yearly intervals and the principal is repaid on the maturity date. Like dated securities issued by the central government, SDLs issued by state governments also qualify for the statutory liquidity requirement of the banks.

The NCB facility was introduced by the RBI to encourage retail participation in the primary market for government securities and SDLs. NSE acts as a facilitator in NCB to aggregate the bids received from the retail investors and submits a single bid to RBI.

NSE has been offering G-sec and T-bills issued by the central government from April 2018 to facilitate retail participation in these securities. Going forward, SDLs will also be offered to retail investors through this facility.

"Adding SDLs in the current offerings will further add to the variety of investment avenues at NSE for greater retail participation in fixed income products," said NSE Managing Director and CEO Vikram Limaye.

"NSE will continue to offer vanilla retail products leveraging on its robust technology and retail distribution capabilities. NSE's wide presence and reach through its members along with investor awareness and education initiatives are likely to bring higher participation by retail in this asset class, helping issuers to diversify their investor base," he said in a statement.

NSE is a leading stock exchange in India and the second largest in the world by numbers of trades in equity shares. It has a fully-integrated business model comprising exchange listings, trading services, clearing and settlement services, indices, market data feeds, technology solutions and financial education offerings.

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