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