Today we are going to discuss about a revolutionary bond scheme. This scheme is incorporated by none other than by the Reserve Bank of India itself. The name of the scheme is RBI Retail direct scheme. Let’s understand this in details.
Introduction
Till date we mostly invest in bonds indirectly. There are some options to buy some corporation bonds nowadays directly but bonds issued by government can only purchased by indirectly. This is going to change after the introduction of this scheme.
Firstly, let’s know about the bonds. Bonds are fixed income securities where you get fixed returns in your investment. Whenever govt. or companies need money, they issue bonds by which they promise fixed returns after certain periods.
Situation of Bond market
As the amount was ridiculously high in bonds, till date they were only restricted to Asset management companies or High Net-worth Individuals. But now onwards retail investors also can buy a part of bond directly through the scheme.
So if RBI, Central govt., State govt. issues a new bond retail investors can buy directly from the specific website portal. Sovereign Gold Bonds issued by RBI or treasury bills issued by govt, also can be bought from there.
Trading of Bonds
Not only we can buy these bonds from the primary market, but we also can sell the bonds in the market rate in secondary market. This buy and sell process will be anonymously. There will be order matching system. It will be an easy process as it is upi, netbanking enabled.
Benefits of retail investors
You will open a gilt account which will be linked with your savings account. After than you can buy any bonds issued there like buying an ipo or stocks. The most beneficial part will be that no beneficiary is involved. A huge amount of cost reduction will happen. It is also 100 percent secured as it is operated by government. It will also a free of cost platform. The transactions will be anonymous so no one can who are buying and who are selling the bonds.
Benefits for Govt
For the government also, this scheme will be helpful. It will expand the bond market in India which is very lower than the countries like USA. It will also increase the liquidity as more people will be in the platform. If govt need huge money in short time to increase infrastructure or any function, they can get quickly by issuing the bonds.
Risks of Bond Market
There are mainly three type of risks in bond market. First is default risk when govt. or company will unable to repay. This is near about zero as govt promising the returns. Second is market risk. If someone want to sell their bonds before maturing then they might get proper price as interest rate fluctuate. Third risk is liquidity risk. As bond is not yet popular among Indians, there may be risk of liquidity where you want to sell but no buyers in the market. All risks can be avoided if you hold that till maturity period.
So if you want to invest, you have to go on RBIretaildirect.org.in site and create an account. Then whenever govt issues any bond we can bid for the bonds as much as we want. If it get allotted it will be seen in our account. We can also trade bonds in secondary market.
- Case study and Reasons for failure of the million dollar start up Tapzo
- Case study of Interior designer business Start up BNK group
- Case study of Wow Momos which become a thousand crore rupees start up
- Reasons of Jio to become a monopoly of telecom sector in India
- RBI launches new scheme to expand the bond market in India
- IPO of the Go Colors company which is known for women bottom wear manufacturer
- A new superpower is rising which may the reason for the next world war
- How a small reselling application Meesho become 30 k crore business company
- Know everything about the new investment vehicle REIT
- How Nestle`s flagship product Maggi destroy other noodles brand of India
- Secret business model of the largest retailer of the world Walmart
- The business strategy of Casify by which it earns from its competitors
- Why the one of the most promising start up “Askmebazaar” failed
- How a small start up Zepto is competing with big players in the online grocery market
- How a small start up Rapido beat big giants like OLA and Uber in bike ride service
- Reasons of failure of a billion dollar Start up “Hike Messenger”
- Billion dollar Success story of an aviation company Indigo in few years
- Success story of an Indian Billionaire and his steel making company
- Business model of a start-up company which depends mainly on memes
- Why one of the most popular two wheeler brand failed in India?
- Rise and fall of Online Apartment buying and renting platform “Housing.com”
- How will jiomart disrupt and create a revolution in online grocery delivery
Final Thoughts
At last we can say that buying bonds is a great way to diversify our investments. If the issuer is govt itself there is lowest chance of default risk. So we must buy the bond to mitigate highly fluctuate stock market returns. This will help us in wealth building in longer run.