How NRIs can invest in govt bonds through RBI's retail direct scheme

In 2021, the RBI came out with the Retail Direct Scheme, a one-stop solution to facilitate investment in government securities by retail investors. NRI investors can also invest via the platform

Non-resident Indians (NRI) can invest in government securities (G-Secs), state development loans (SDLs) and treasury bills (T-bills) directly through the Reserve Bank of India's retail direct platform but sovereign gold bonds (SGBs) and floating rate bonds are still not an option through this route.

NRIs and OCIs can also buy and sell these instruments in the secondary markets via the RBI retail direct account and there is no limit on such investments.

Investing through RBI's platform comes with several  advantages such as  zero commision and brokerage. You don't have to pay any annual  maintenance fees either. 

Currently, NRIs are not allowed to invest in sovereign gold bonds. However, if they have already invested in these bonds before acquiring NRI status, they can hold it till early redemption or maturity. NRI can invest in gold by purchasing gold or opting for E-gold, Gold ETFs and Gold mutual funds but this is not an option through the RBI platform.
 

India has over 32 million Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), according to the latest data from the Ministry of External Affairs. '

In 2020, the Reserve Bank of India (RBI) introduced the 'Fully Accessible Route' (FAR) to allow investment by Non-residential Indians (NRIs) in government securities (G-Secs), state development loans (SDLs) and treasury bills (T-bills).

In 2021, the central bank came out with the Retail Direct Scheme, a one-stop solution to facilitate investment in government securities by retail investors. According to RBI, non-resident retail investors eligible to invest in government securities under the Foreign Exchange Management Act, 1999, can also invest in G-Secs through this platform. 

What is the RBI Retail Direct?

The RBI Retail Direct platform allows retail investors to purchase treasury bills, dated securities, sovereign gold bonds (SGB), and state development loans (SDLs) from both primary and secondary markets. 

Retail investors can open an online Retail Direct Gilt Account (RDG Account) on the platform, which can be linked to their savings bank accounts. The platform provides access to government securities and secondary market operations through the NDS-OM, a screen-based electronic anonymous order matching system owned by the RBI. 

Previously, this facility was available with institutions such as banks, primary dealers, insurance companies, and mutual funds.

According to the RBI Retail Direct website, on the platform transactions can be conducted using savings bank accounts through Internet banking or UPI. The platform offers various support facilities and investor services, including transaction and balance statements, nominations, pledges or lien of securities, and gift transactions. 

How NRIs can open an RBI Retail Direct Account?

While there are no ceilings on investments by NRIs, the RBI only allows NRI investors defined in section 2(w) of the Foreign Exchange Management Act, 1999 (FEMA) to invest in certain government bonds.  The central bank also periodically notifies what ‘Specified securities’ FAR investments are allowed. 

To open an RBI Retail Direct account, Non-Resident Indians (NRIs) will need an Indian mobile number linked to Aadhaar, if not on the central KYC (CKYC) registry, an NRO (non-resident ordinary) savings bank account with UPI/net banking services, a PAN card, and they should also provide a scanned copy of their signature along with a cancelled cheque from the NRO bank account.

A step-by-step guide for opening the RBI retail direct account:

• Visit https://rbiretaildirect.org.in.
• Click on the Registration link to begin the account opening process.
• Provide your personal details, including your full name, PAN, mobile number, email address, residential address, savings bank account number, etc. Also, specify a login name.
• Mobile number and email address will be authenticated using OTP (One-Time Password).
• All further customer requests and services will be OTP-based.
• For joint accounts, you will need to provide the PAN, email address, and phone number of both account holders.
• After providing these details, you will receive a reference number to track your application.
• Initiate your Know Your Customer (KYC) verification process.
• In the case of joint accounts, KYC verification will be conducted for both account holders.
• It is mandatory to fill in the nomination details at the time of opening the account.
• Your savings bank account will be linked to your Retail Direct account by crediting a token amount into your bank account and verifying the same.
• Once the KYC is completed, an RDG account will be opened in the name of the investor(s).
• Information related to your account number, login ID, and password to access the Online Portal will be sent to your registered email address.
• In the event of KYC failures, individuals can choose to submit a new application or resubmit the application after making necessary changes.