Retail investors warm up to T-Bills, Sovereign Gold Bonds on RBI’s portal

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Retail investors seem to be warming up to investing in Government Securities via the Reserve Bank of India’s Retail Direct (RBI-RD) Scheme, going by the number of accounts opened and total primary market subscriptions.

The number of accounts opened under this scheme via the RBI-RD portal (https://rbiretaildirect.org.in) jumped 62 per cent year-on-year (YoY) to 1,09,212 as on January 1, 2024, against 67,591 as on January 2, 2023, per RBI data.

Total primary market subscriptions by individual investors in Government Securities (G-Secs) rose 178 per cent to ₹3,548.25 crore as on January 1, 2024, against ₹1,275.49 crore as on January 2, 2023.

For the purpose of RBI-RD Scheme, G-Secs include Government of India/GoI Treasury Bills, GoI Dated Securities, State Development Loans/SDLs and Sovereign Gold Bonds/SGBs. The basket of products offered via the portal was expanded in October 2023 to include subscription to Floating Rate Savings Bonds/FRSBs, 2020 (Taxable).

Investors lap up T-Bills and SGBs

Within total primary market subscriptions in G-Secs, individual investors showed more enthusiasm in subscribing to Treasury Bills and Sovereign Gold Bonds (SGBs) vis-a-vis GoI Dated Securities and SDLs.

As on January 1, 2024, subscription in Treasury Bills shot up about 228 per cent to ₹2,351.63 crore (₹717 crore). Subscription in SGBs skyrocketed 286 per cent to ₹239.23 crore (₹62.02 crore).

As on January 1, 2024, subscription in GoI Dated Securities rose about 67 per cent to ₹567.61 crore (₹340.65 crore). Subscription in SDLs were up about 103 per cent to ₹316.27 crore (₹155.82 crore), while investment in FRSBs via RBI-RD stood at ₹73.51 crore.

T-Bills, a good bet

Ajay Manglunia, MD & Head, Investment Grade Group, JM Financial, observed that Treasury Bills — which are highly liquid and of short duration — are currently fetching about 7-7.10 per cent return, almost similar to fixed deposit interest rates.

“Now, if an investor buys a long-term paper such as a 10-year paper, he gets about 7.20 per cent return. Since there is hardly any spread (difference in yields between short-term and long-term papers), there is no extra incentive to buy long term papers. The yield curve is pretty much flattish. So, currently, investment in T-bills is a good bet,” he said.

Manglunia underscored that investors have got good return on their investment in SGBs, earning 2.5 per cent interest on SGB units and also benefiting from price appreciation of the precious metal.

For example, the price for final redemption (in November 2023) of SGB 2015-I was ₹6,132 per unit of SGB against an issue price of ₹2,684.