Asset Class: RBI allows retail buyers to open gilt accounts

By: |
February 6, 2021 4:45 AM

The total AUM in gilt funds is just about Rs 20,000 crore.

The experts added that this is one reason fixed deposits are popular.The experts added that this is one reason fixed deposits are popular.

Retail investors can soon buy gilts, both in the primary and secondary markets, by opening accounts with Reserve Bank of India (RBI).

While the move is reformist, experts noted the initial response may be lukewarm, given gilt funds offer reasonably good returns with indexation benefits if held for over three years. “Unless primary dealers offer liquidity or the trading volumes on the stock exchanges go up meaningfully, savers may not want to lock themselves into the product for long tenures,”they said.

The experts added that this is one reason fixed deposits are popular.

The total AUM in gilt funds is just about Rs 20,000 crore.

At the same time, PF professionals observed, gilt funds are actively managed in terms of duration and savers who want to buy and hold for a fixed period may want to buy gilts directly. Currently, the process of buying gilts is cumbersome since these are issued via the Securities General Ledger.

However,a direct account with the central bank would make the process easier.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Axis Bank board approves reclassification of United India Insurance as public shareholder
2RBI gives 3-month extension to Rupee Cooperative Bank
3Reliance Home Finance defaults on around Rs 100-crore repayments in December