Just to be clear, an RBI-RDG account is NOT the only way to directly invest in government bonds.
Government bonds (GSECs, SDLs, TBills)
can be purchased through one’s trading account,
and can be held in one’s demat account.
For more details on purchasing and holding govt. bonds using your trading and demat accounts,
checkout the various references and links in these recent discussions…
- purchasing during periodic govt. auctions.
or - purchasing from the secondary markets (NSE, BSE) just like buying a stock.
If you are a trader,
an added advantage of purchasing and holding govt. bonds using your trading and demat accounts,
is the ability to pledge these holdings for additional temporary margin. (not possible if held in RBI-RDG account.)