India launches retail trading in government securities
Thursday, 16 January 2003, 20:30 IST
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NEW DELHI: The Reserve Bank of India (RBI) Thursday said it would allow buying and selling of government securities through stock exchanges to facilitate easier access and wider participation. "From January 16, any individual in India can buy or sell government bond in the same manner as buying or selling of shares," said a RBI statement here. The securities are issued by the federal and state governments and being sovereign paper are termed the safest investment option. "The system proposed is similar to the one available for buying and selling of shares," said the statement. "The reach of the stock exchange screens will ensure that government securities can be bought or sold throughout the country." Currently, the participants in the government securities market are usually banks, insurance companies, provident funds, trusts, non-banking finance companies and mutual funds. "As the purchase and sale of government securities requires access to the wholesale market, this market was hitherto practically out of reach of the individual investors," said the RBI statement. "Even for mid-segment investors such as trusts and non-banking finance companies located in far flung places there has been no easy access for investing in this market, thus making them vulnerable to unscrupulous intermediaries." The Reserve Bank, which regulates securities trading, said the retail trading was expected to improve the efficiency of government securities market as well as its transparency, depth and liquidity. "Keeping in view the interest of the small investor, the minimum order size has been kept low at 1,000 that is 10 units of face value of 100 each," said the statement.
Source: IANS
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