RBI Retail Direct Scheme: Now common people will also be able to buy government bonds directly, get guaranteed returns of 7% to 8% without any middleman.

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The ‘Retail Direct Scheme’ of the Reserve Bank of India (RBI) has completely changed the access of common citizens to India’s debt and bond markets. Earlier, investment in Government Securities (G-Secs) was limited only to large financial institutions, banks, insurance companies and foreign portfolio investors (FPIs). To access these securities, retail investors had to resort to gilt mutual funds, where fund management charges (expense ratios) had to be paid. Now through this scheme, any ordinary citizen can invest his capital safely in 100% sovereign guaranteed government bonds by opening his Gilt account directly with the Reserve Bank of India without any broker, middleman or AMC.

The interest (Coupon Rate/Yield) on government bonds depends on the type of security and tenure you are choosing:








Security type Tenure of investment Current Estimated Interest/Yield Method of interest payment
Treasury Bills (T-Bills) 91 days, 182 days, 364 days About 6.25% to 6.55% Issued at discount, full face value on maturity
Central Government Bonds (G-Secs) 5 years to 40 years About 6.80% to 7.30% Every 6 months directly into bank account (half yearly)
State Development Loans (SDLs) 10 years to 20 years About 7.40% to 8.05% Every 6 months directly into bank account
Floating Rate Savings Bonds (FRSB) 7 years About 8.05% (NSC + 0.35%) Semi-Annual (Reset every 6 months)

(Note: Treasury Bills do not pay interest, rather they are purchased at a discount and have a face value of ₹100 on maturity. On the other hand, interest on long-term G-Secs and State Development Loans (SDLs) is paid directly into the investor’s linked bank account twice a year, i.e. every six months.

Investors can participate in the following financial instruments through RBI’s Retail Direct Gilt (RDG) account:

  • Government Dated Securities (G-Secs): Long-term bonds ranging from 5 to 40 years issued by the central government.

  • Treasury Bills (T-Bills): Central Government secured instruments to park short-term capital of less than 1 year.

  • State Development Loans (SDLs): Bonds issued for infrastructure by various state governments (e.g. Maharashtra, Gujarat, Uttar Pradesh), which often yield higher returns than the Centre, ranging from 0.30% to 0.75%.

  • Sovereign Gold Bond (SGB): Primary auction and secondary market trading of gold bonds issued by the government.

  1. Zero Default Risk (100% Sovereign Security): In bank FD, only deposits up to ₹ 5 lakh are insured under DICGC. In contrast, government securities have a direct sovereign guarantee by the Government of India, so whether you invest ₹10,000 or ₹50 lakh, your entire principal and interest are 100% protected.

  2. Facility to lock the interest rate for a long period: Banks generally offer FDs of maximum 5 or 10 years. With RBI Retail Direct you can lock in an interest rate of over 7% forever for 20, 30 or 40 years, which is the safest way to create a regular pension for life after retirement.

  3. Zero Brokerage and Zero Maintenance Charges: RBI does not charge any Account Maintenance Charge (AMC) or brokerage for opening, operating or bidding this account.

  4. Liquidity in Secondary Market: If you need money before maturity, you can withdraw cash by selling your bonds in the secondary market through the NDS-OM platform.

RBI Retail Direct Gilt (RDG) account can be opened by any Indian resident individually or in joint name. Non-Resident Indians (NRIs) can also participate within the ambit of FEMA rules.

Documents required to open account:

  • Current or savings bank account operated in India (Rupee Savings Bank Account).

  • Permanent Account Number (PAN Card).

  • Aadhar Card or Official Valid Document (OVD) for KYC.

  • Valid mobile number and active email ID linked to Aadhaar.

  • Scanned copy of signature.

Account opening in RBI Retail Direct is completely digital and paperless:

  1. Visit the official portal: First of all go to the official portal of RBI rbiretaildirect.org.in.

  2. Start Registration: Click on ‘Open RDG Account’ option and enter your PAN number, name, email and mobile number.

  3. Online e-KYC: Complete the quick e-KYC or Video KYC process through Aadhaar OTP.

  4. Link Bank Account: Fill in your bank account details and upload the copy of canceled cheque.

  5. Get login credentials: Once the verification is complete, the login ID and password are sent to your email. After this, you can buy government bonds for a minimum amount of ₹ 10,000 through non-competitive bidding in the primary auction.

The half-yearly coupon interest received from government bonds is added to the investor’s total annual income and is subject to ordinary income tax as per the investor’s applicable income tax slab (e.g. 10%, 20% or 30%). However, unlike bank FDs, tax deducted at source (TDS) is not deducted on the coupon payments of government bonds, hence the investor receives the full interest and can adjust the tax later while filing his advance tax or ITR.

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