Please don’t mention Gilt funds.
I have already tried SBI DHFI & pnb gilts. I think they only cater to coporate clients.
Please don’t mention Gilt funds.
I have already tried SBI DHFI & pnb gilts. I think they only cater to coporate clients.
Quoting the article from Hindu Business line by Rajalakshmi Sivam
June 14, 2013:
Government securities (g-secs) are a good investment option if you are looking for an assured, risk-free return. While direct investments in G-secs may not have caught too much of our attention so far, it is perhaps set to change with inflation-indexed bonds coming in. Hence, it pays to know how to invest in them.
Primary/Secondary market buys
When the government auctions bonds, both institutional players and individuals can bid for it. Retail investors are allowed by the Reserve Bank of India to place a non-competitive bid. This means you can participate in the auction without having to quote the price for it. Placing of bids can however be done only through a primary dealer.
Primary dealers (PDs) are agents authorised by the Reserve Bank of India to act as intermediaries in the government securities market. SBI DFHI, ICICI Securities, HDFC Bank and Kotak Mahindra Bank are some of the primary dealers. PDs place bids for securities electronically in the NDS (Negotiated Dealing System) platform of Clearing Corporation of India. After the auction, they will be allotted the security based on the weighted average price discovered.
When you approach a primary dealer, you open a securities account or what is called gilt account. This is where the securities will be stored in dematerialised form. To open a gilt account, you need to fill the KYC application, provide bank account details, a photocopy of the PAN card and also sign an agreement with the primary dealer authorising him to act as your custodian. The PD will hold the security in turn with the RBI . There is a nominal charge attached to the gilt account in the form of annual maintenance charge plus a commission for the PDs. One of the large primary dealers, for instance, charges around 6 paise for Rs. 100 of investment.
For buying or selling in the secondary market, you need to go through a primary dealer again. PDs place orders for buying/selling in NDS-OM (Negotiated Dealing System- Order Matching) platform. This interface matches orders electronically and helps one get the best deal.
Online platforms
Last year, IDBI Bank launched an online platform for retail investors looking to invest in government securities. To buy G-Secs through this platform all you need is a bank account (not necessarily with IDBI Bank) and a demat account with a depository participant. You can then go online and register in IDBI Samriddhi G-Sec portal by providing personal and PAN card details. Once registered, you get a log-in ID and password. This done, you can just log on to the website, select the security and place your order. Since IDBI Bank is a PD, it offers investors access to most of the government securities, says RK Bansal, Executive Director, IDBI Bank. For transactions through this portal, there is no brokerage charge. However, there is a small levy on commission which is built into the price of the bond.
One another striking feature of the portal is that IDBI Bank assures liquidity to retail investors by offering to buy the security from them when they intend to sell. So, you can exit whenever you want.
Now, do PDs that have a broking arm or others that offer online platforms to invest in stocks and bonds, offer an online platform for buying G-Secs? Some players do. But, the list of securities they offer is very limited. Also, there is no assurance on liquidity. If you want to place a sell order and get cash on hand the third day, it may not be possible.
The easiest, still
Considering all this, investing in gilt funds (mutual funds that invest in government securities) are still the easiest route for a retail investor looking for investing in government securities, says Ajay Marwah, Head of Trading, Treasury at HDFC Bank. “One can buy/sell at the NAV price any time and there is no hassle of running around. One can be assured that he will get the money on T+3 as he places a sell order.”