General Studies IIIEconomyRBI

RBI Retail Direct Scheme and integrated ombudsman scheme


Prime Minister Narendra Modi has launched two new initiatives of RBI, the Retail Direct Scheme and the Integrated Ombudsman Scheme.

What is RBI Retail Direct Scheme?

  • The scheme allows retail investors to buy and sell government securities (G-Sec) online, both in the primary and secondary markets.
  • The retail investors can now invest in G-Secs by opening a gilt securities account called Retail Direct Gilt (RDG) Account with the RBI.
  • Only one bid per security is permitted and payment to the aggregator/receiving office can be made through using the net-banking or UPI facility from the linked bank account.
  • Registered investors can access the secondary market transaction link on the online portal to buy or sell government securities through NDS-OM.
  • For buying of government bonds, payment can be made by transfer of funds to the designated account of CCIL (Clearing Corporation of India NDS-OM).

What is RBI Integrated Ombudsman Scheme?

  • The integrated ombudsman scheme amalgamates 3 ombudsman scheme of RBI – banking ombudsman scheme of 2006, ombudsman scheme for NBFCs of 2018 and ombudsman scheme of digital transactions of 2019.
  • It is based on “One Nation-One Ombudsman” with one portal, one email, and one address for the customers to lodge their complaints.
  • The new scheme also includes non-scheduled primary co-operative banks with a deposit size of Rs 50 crore and above.
  • The responsibility of representing the Regulated Entity and furnishing information in respect of complaints filed by customers would be that of the Principal Nodal Officer in the rank of a General Manager in a Public Sector Bank or equivalent.
  • It will improve the grievance redress mechanism for resolving customer complaints against RBI’s regulated entities.
  • RBI’s Executive Director-in charge of Consumer Education and Protection Department would be the Appellate Authority under the integrated scheme.
  • Customers will be able to file complaints, submit documents, track status, and give feedback through a single email address.
  • There will be a multilingual toll-free number that will provide all relevant information on grievance redress.
  • It will be cost-free for customers of banks and members of the public.

Benefits of RDS

  • With the government being the borrower, there is a sovereign guarantee for the funds and hence zero risk of default.
  • Also, government securities may offer better interest rates than bank fixed deposits, depending on prevailing interest rate trends.
  • For example, the latest yield on the benchmark 10-year government securities is 6.366%.

How can individuals access G-Sec offerings?

  • Investors wishing to open a Retail Direct Gilt account directly with the RBI can do so through an online portal set up for the purpose of the scheme.
  • Once the account is activated with the aid of a password sent to the user’s mobile phone, investors will be permitted to buy securities either in the primary market or in the secondary market.
  • The minimum amount for a bid is ₹10,000 and in multiples of ₹10,000 thereafter. Payments may be made through Net banking or the UPI platform.

Why was it necessary to introduce this scheme?

  • Broader investor base: The scheme would help broaden the investor base and provide retail investors with enhanced access to the government securities market — both primary and secondary.
  • Institutional investment: Accessing retail investors could free up room for companies to bring funds from institutional investors which may otherwise have been cornered by the government.
  • Diverse borrowing for government: This scheme would facilitate smooth completion of the Government borrowing programme in 2021-22.
  • Structural reform: It is a major structural reform placing India among select few countries which have similar facilities.

Why is the RBI setting up an Integrated Ombudsman?

  • Prior to the introduction of this scheme, the RBI had three different ombudsman schemes to aid dispute resolution with respect to banks, NBFCs, and non-bank pre-paid payment issuers (PPIs).
  • They were operated by the RBI through 22 ombudsman offices.
  • The RBI would now appoint the Ombudsman and a Deputy Ombudsman for three years.
  • Complaints may be made either physically to the Centralised Receipt and Processing Centre or the RBI’s offices; or electronically through the regulator’s complaint management system.

Source: The Hindu

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