Monetary policy: Retail interest in G-secs may be limited, say experts

HNI participation may be gradual; mutual funds see little impact on fund flows

The Reserve Bank of India’s (RBI’s) move to allow direct retail investor participation in government bonds is likely to attract more interest from high net-worth individuals.

Also, enhancing retail interest is going to be long-drawn-out affair. Nor is it expected to hit the flow of money into bank deposits and mutual funds, ruling out a substitution effect, said bankers.

Small savings instruments, though illiquid, yield better returns than government securities and hence only high net-worth individuals may be interested in them, said Karthik Srinivasan, group head, financial sector ratings, ICRA.

Soumyajit Niyogi, associate director, India Ratings & Research, said participation