Do you know you can invest in GSec and TBill through your dmat with equity broker? And you can use it for FNO margin as well?
Introduction:
Government securities are low-risk debt instruments issued by the Government of India. They provide a fixed income to investors and are available in two types – Treasury Bills (T-bills) and Dated Securities (G-secs). T-bills are short-term securities with a maturity of up to one year, while G-secs are long-term securities with a maturity of more than one year.
There are three ways in which you can hold GSec/Tbill. These 3 types are suited for different purposes
1. In Demat with broker to buy government securities in your dmat through the NSE
Here is a detailed process for buying government securities in the primary market through NSE:
Open a Demat Account: The first step is to open a demat account with a registered depository participant (DP) such as CDSL or NSDL. This account will be used to hold the securities purchased through the auction. Most of the brokers have now started supporting buying GSec on their platform eg. Zerodha has different section for investing in GSec.
Check Auction Details: The RBI announces the details of the auction in advance on its website. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx Generally security auction details are released on Monday for both Tbill and GSec. Investors should check the details of the auction such as the security being auctioned, its maturity date, and the auction date.
Place a Bid: Once the investor has checked the details of the auction, they can place a bid through broker. The bid can be placed using the e-ipo platform of the NSE. The bid should specify the quantity of securities the investor wishes to purchase. The bid amount should also be within the available balance in the investor’s bank account. Generally NSE blocks 4-5% higher amount for bidding. Once price is finalised by RBI, rest amount is refunded. If auction is scheduled for Wednesday, bids should be done on Tuesday by 5 pm.
Allotment of Securities: The RBI announces the results of the auction on its website and also informs the allotment to the respective banks. Successful bidders will receive an allotment of the securities at the weighted average price. It happens generally within 2 days of auction. By Friday, It should reflect in your dmat.
Investors should note that the minimum amount of investment in government securities is Rs. 10,000, and bids must be in multiples of Rs. 10,000. There is no upper limit on the amount that can be invested in government securities, but the investor should ensure that they have sufficient funds in their bank account to cover the bid amount.
It is also important to note that the bidding process for T-bills and G-secs is different. In the case of T-bills, the auction is conducted on a discount basis, where the bid price is the discount to the face value of the security. For example, if the face value of the T-bill is Rs. 100, and the bid price is Rs. 98, the discount is Rs. 2. In the case of G-secs, the auction is conducted on a yield basis, where the bid price is the yield at which the investor wishes to purchase the security.
2. Buying Government Securities through SGL/CSGL Accounts
SGL (Subsidiary General Ledger) and CSGL (Constituent Subsidiary General Ledger) accounts are maintained by the RBI for investors who wish to hold government securities in a non-demat form. Investors can open an SGL/CSGL account through a bank or Primary Dealer and purchase government securities through the account.
There are multiple ways to buy government securities in India. The most popular methods are:
Buying Government Securities through Primary Auctions: The Reserve Bank of India (RBI) conducts regular primary auctions of government securities. Investors can participate in these auctions by submitting bids through their bank or primary dealer. The auction process is conducted online through the RBI’s platform called the E-Kuber system. Successful bidders receive the securities at the cut-off price.
Buying Government Securities in the Secondary Market: Government securities can also be bought and sold in the secondary market. In the secondary market, investors can place an order for the desired government security on the broker’s platform, specifying the quantity and price at which they wish to buy. Once the order is executed, the securities will be credited to the investor’s account.
3. Buy Government security through Retail Direct account
https://rbiretaildirect.org.in/#/
RBI has introduced abovementioned website for retail to invest directly in government securities. Investors through online access to the government securities market – both primary and secondary – along with the facility to open their gilt securities account (‘Retail Direct’) with the RBI.
Retail investors (individuals) will have the facility to open and maintain the ‘Retail Direct Gilt Account’ (RDG Account) with RBI.
Through this account retail investors can see what securities are being auctioned and participate in auction. There are various methods of payment also like UPI or bank account transfer available to pay for securities.
They are also trying to give Access to NDS-OM where retail can sell their securities to all institutional participants.