PNB Gilts plans network expansion

Our Markets Bureau

New Delhi, Aug 10: PNB Gilts is planning to expand its branch network in an attempt to woo retail investors towards government securities. The primary dealer, which is listed on the bourses is also planning to diversify its product portfolio to add more options for its clients besides taking up an aggressively marketing drive.

PNB Gilts is currently offering only two government securities, namely 12.00% GOI 2008 and 11.83% GOI 2014, to the retail investors. This portfolio will be expanded to cover non-government securities, said PNB Gilts managing director Arun Kaul. During its initial public offer in November 2000, the primary market dealer had announced its plans to tap the retail investors in the government securities. However, the retail investment is yet to catch up on a significant scale and PNB Gilts has been able to mobilise only Rs 2 crore out of the total turnover of Rs 23,000 crore in the first quarter. The major hindrance in the growth of retail market in the government securities is lack of awareness, Mr Kaul admitted. The minimum retail investment in g-secs is Rs 25,000 and in multiples of Rs 1,000.

According to him, ‘‘It is in the interest of retail investors to put their money into gilts as they offer superior returns compared to fixed deposits at zero risk. Besides, gilts do not have tax deduction at source (TDS) and provide high liquidity. The annualised returns from gilts have been as high as 30 per cent in the past few months, thanks to low interest rates and lacklustre equity markets.’’ An investor who had purchased the government of India’s security at Rs 115.33 on April 30, 2001 with coupon of 12 per cent maturing in 2008 and sold it at Rs 117.88 on July 31, earned an annualised return of 30 per cent.