RBI Retail Direct portal. T-bills + dated G-Secs + SDLs. 7-7.5% yield. ZERO credit risk. ₹10K minimum. Better than FDs for HNW.
G-Secs = Government Securities. Government of India issued debt instruments. ZERO CREDIT RISK (sovereign). TYPES: (1) T-BILLS — 91-day, 182-day, 364-day. Discounted instruments. (2) DATED G-SECS — 5-40 year tenure. Coupon-bearing. (3) SDLs (State Development Loans) — states issue, slightly higher yield. RETAIL ACCESS via RBI RETAIL DIRECT (rbiretaildirect.org.in). Free account. Direct primary auctions + secondary market.
RBI RETAIL DIRECT (launched 2021): (1) FREE individual investor portal. (2) Account opening online. (3) PAN + Aadhaar + bank account. (4) Bid in PRIMARY AUCTIONS (weekly). (5) Trade in secondary market via NDS-OM. (6) Holdings in RBI CSGL account. (7) Auto-credit of interest + principal. ADVANTAGES: (1) ZERO middleman cost. (2) ZERO credit risk. (3) Direct govt access. (4) Lower transaction cost vs MFs.
(1) YIELD: G-Secs 7-7.5%, FD 6.5-7.5% (similar). (2) CREDIT RISK: G-Secs ZERO (govt). FD bank credit risk + DICGC ₹5L insurance only. (3) LIQUIDITY: G-Secs tradeable secondary market. FD lock-in. (4) TAX: G-Secs interest taxable at slab + LTCG if held long. FD interest taxable slab + TDS. (5) MINIMUM: G-Secs ₹10K, FD ₹1K-5K. STRATEGIC: G-Secs better for ₹10L+ portfolio. FD for smaller + simpler.
G-SECS TAX: (1) INTEREST: semi-annual coupon, taxable at slab rate. (2) CAPITAL GAINS: (a) Held > 1 year: LTCG 12.5% above ₹1.25L. (b) Held ≤ 1 year: STCG slab rate. (3) MATURITY: principal returned tax-free (capital). (4) TDS: typically NOT deducted on G-Secs interest (different from FDs). SELF-REPORT in ITR. STRATEGIC: G-Secs more tax-efficient than FDs for high-net-worth investors.
RETAIL G-SECS STRATEGY: (1) BUILDUP ladder of G-Secs maturities. (2) Mix T-bills (short) + dated G-secs (long). (3) Reinvest coupons. (4) Allocate 20-40% of debt portfolio to G-Secs. (5) STATE SDLs for slightly higher yield. (6) AVOID very long-dated (30-40 yr) unless retiree. RECOMMENDED for: (a) High-net-worth wanting credit-risk-free. (b) Retirees with predictable income needs. (c) Tax-efficient debt allocation. (d) Multi-asset portfolio diversification.