News to date: The RBI announced in February the idea of ​​a Retail Direct Scheme for depositors in state security and the Integrated Ombudsman Scheme. The plans were unveiled by the Prime Minister on November 12.

What is a Retail Direct Scheme?

Under the Retail Direct Scheme, small investors can now buy or sell government shares (G-Secs), or bonds, directly through a mediator such as a mutual fund. It is similar with investing in debt instruments such as fixed deposits in banks. However, the same tax rules apply to earnings from G-Secs. But, with the Government being a lender, there is a guarantee of financial independence and therefore no risk of failure. Also, government interest rates may offer better interest rates than unsecured bank deposits, depending on the interest rate. For example, the most recent yield on 10-year-old government security is 6.366%. India’s largest lender, State Bank of India, offers 5.4% on ₹ 2 crore deposits for 5 to 10 years.

How can people find G-Sec offers?

Advertisers who wish to open a Retail Direct Gilt account directly with the RBI can do so via the website set up for the purpose of this process. Once the account is opened with the help of a password sent to the user’s mobile phone, depositors will be allowed to purchase securities in the first or second market. The minimum purchase amount is ₹ 10,000 and an increase of ₹ 10,000 afterwards. Payment can be made via Net bank or UPI platform. Participants in the sale should pay a fee below the “Securities and Treasury Bills,” the RBI said in a November 12 statement.

Why was it necessary to start this process?

The RBI said the plan would help “grow investors and give retailers the opportunity to access the public security market – primary and secondary.” It also called the plan a “major change that puts India among the few countries with similar facilities”. The plan, among others, “will facilitate the successful completion of the Government lending program in 2021-22”.

The government wants to borrow ₹ 12 lakh crore this year ending March 31, 2022. The sharp rise in lending – which is expected to boost infrastructure and social grants – follows the recent economic downturn. The Union Government, therefore, seeks to expand the base of registered investors to buy bonds. An additional benefit of the Government to the acquisition of commercial investors may be to free up space for companies to earn money from investors; funds that were probably blocked by the government to finance its finances.

Why is the RBI establishing an Integrated Ombudsman?

Prior to the implementation of the plan, the RBI had three different ombudsman approaches to help resolve disputes regarding banks, NBFCs, and non-bank payers (PPIs). He is governed by the RBI through 22 ombudsman offices. By initiating an integrated process, the former is removed. When the supervisor unveiled the request of the Integrated Ombudsman in February, he said he wanted to resolve disputes to be “simple, effective and responsive”. Hence the idea of ​​merging the three ombudsman schemes with a view to addressing central grievances. This, he said, was aimed at making the grievance redressal process easier “by allowing customers to register their grievances under an integrated, single-centralized system”. The RBI will appoint an Ombudsman and a Deputy Ombudsman for a term of three years. Complaints can be lodged with the Centralized Receipt and Processing Center or at the RBI offices; or online via the complaint management system (https://cms.rbi.org.in/).

What about complaints about pending judgment?

Although the previous three approaches have been resolved, the RBI also stated that the decision-making process, grievances and remuneration provided “will be continued under the Ombudsman Schemes and the Reserve Bank’s directives issued there”.