Inter Depository Transfers of G-Sec, T-Bills, and Gold Bonds are now allowed

CDSL in a circular dated January 31, 2020, announced on market inter depository transfers will henceforth be allowed for Government Securities (G-Secs), State Development Loans(SDLs), Treasury Bills (T-bills) and Sovereign Gold Bonds (SGBs).

This is really good news and this means you can now buy and sell G-Secs, T-bills, SGBs on the secondary market. Up until now, we were allowing only selling and not buying. Hopefully, over a period of time, this should increase the volumes in G-Secs, T-bills and SGBs on the exchanges.

Up until now, there were absolutely no volumes in the case of G-Secs, and T-bills and steep discounts/premiums to the current price of Gold in the case of SGBs because inter depository transfers of these securities weren’t allowed. Just to set the context, here’s why inter depository transfers were needed:

Whenever you buy shares on the secondary market, the shares are credited by the Exchange to the broker’s pool account. Every broker is required to have a pool account with NSDL and CDSL which are the 2 depositories. As a client, you’d normally have an account with either NSDL/CDSL. If you’ve opened a demat account through Zerodha, your demat account is with CDSL. Assume you buy units of SGB, these units could get credited from the Exchange either in Zerodha’s NSDL pool account/CDSL pool account. If the units get credited in the CDSL pool account, the broker can transfer these units to your CDSL account.

But, if the units get credited to the broker’s NSDL pool account, the units cannot be transferred to your CDSL demat account. This is because RBI & the depositories today, don’t allow Inter Depositary transfers (NSDL to CDSL and vice versa) in any Government security. In light of such limitation, we aren’t allowing fresh purchase from the secondary markets. If you’ve received allotment of units when the issue was open, you can redeem them by placing a sell order.
From this answer by @VenuMadhav

How to buy G-Secs, T-bills, and SGBs on Kite?

Just search for the bond you wish to buy. For example, if you want to buy 7.26 2029 bond then just search for 7.26. Similar for t-bills, just search for 91tb

image

image

For gold bonds, just search for SGB or by the instrumebt symbol
image

5 Likes

@Bhuvan, Does this mean I can transfer SGB from IL&FS’s NSDL account to my Zerodha’s CDSL account without going through the ‘Value Free Transfer’ mode ?

My buy order for G-Secs (on Sep 29) was short delivered on Oct 1 and yesterday, instead of having the cash refunded or the bonds credited to demat, I got the following email :

This thread announces that the inter-depository transfer of G-Secs has been enabled since Feb 7.
This is highly irregular. I feel like I should worry and panic.
Have raised a support ticket, not heard back yet

1 Like

Nothing to worry, checking this.

1 Like

We are facing an issue with inter-depository transfers of gsec from our pool account to the client’s demat account. We have got in touch with the depositories to have this fixed and they have assured a resolution at the earliest. Your securities are safe and will be credited to you as soon as we have a resolution on this issue from the depositories. We’re expecting this to be cleared in the next 2-3 days.

2 Likes

Issue is fixed. Thanks :slight_smile:

1 Like