PM to launch RBI's retail direct, integrated ombudsman schemes

• Prime Minister will be launching two schemes of the Reserve Bank of India (RBI) today that may go a long way in changing how the household sector invests and complains if anything goes wrong with their savings.
• With the introduction of retail direct, a common man can directly take a position in government securities (g-sec), considered to be the safest asset class a sovereign can offer.
• The idea was first floated by the RBI in the February 2021 monetary policy, and potentially challenges, or perhaps complements debt mutual funds and bank savings.

RBI Retail direct scheme

• Under the scheme, retail investors (individuals) will have the facility to open and maintain the ‘Retail Direct Gilt Account’ (RDG Account) with the RBI.
• A ""Gilt Account"" means an account opened and maintained for holding Government securities
• The scheme has been launched as part of the RBI's ongoing efforts to increase retail participation in government securities
• It was announced in February 2021 for improving ease of access by retail investors through online access to the government securities market – both primary and secondary -
• It also provides facility to open gilt securities account ('Retail Direct') with the RBI.
• Retail investors will need to open a RDG Account with RBI to access its G-Sec platform.
• Registered investors could also use the online portal to access to primary issuance of government securities, as well as access to NDS-OM (Negotiated Dealing System - Order Matching system).
• NDS-OM refers to RBI's screen-based, anonymous electronic order matching system for trading in government securities in the secondary market.
• Retail investors will need following things to participate in the scheme:

1. A rupee savings bank account maintained in India,
2. PAN or any officially valid document for KYC purposes
3. A valid email id and mobile number to register under the scheme and maintain a RDG account.

• Non-resident retail investors, eligible to invest in government securities under Foreign Exchange Management Act, 1999, can also avail of the scheme.
• RDG account can be opened singly or jointly with another retail investor
• Government securities will include:

1. Treasury bills,
2. Dated securities,
3. Sovereign gold bonds (SGBs), and
4. State development loans (SDLs).

What is a retail investor?

• Retail investors are sometimes also called individual investors or retail traders.
• These are non-professional investors who purchase assets such as stocks, bonds, securities, mutual funds, and exchange traded funds (ETFs).
• They are only able to make these purchases by going through another party such as a brokerage firm or other financial professional.

Integrated ombudsman scheme

• It is not a completely new initiative as such, but cuts down on a lot of complexities at one go.
• Here the central bank is merging three of its own ombudsman schemes, or redressal systems on financial matters, into one.
• The central bank currently runs separate ombudsman schemes from 22 offices -- for banks, non-banking financial companies (NBFC), and for digital transactions.
• The banking ombudsman scheme was launched in 1995, but the NBFC and the digital payments ombudsman were launched as recently as in 2018 and 2019 respectively, as NBFCs became serious retail lenders, and digital payments became mainstream.
• RBI data shows that with increased awareness, digital penetration and financial inclusion, there was a steep rise in the number of complaints against various regulated entities.
• The ‘One Nation–One Ombudsman’ approach of the RBI will enable the customers to file their complaint from anywhere at any time through portal or email, or through physical mode at one point of receipt, without the need to identify any specific ombudsman or scheme.
• This integrated scheme will also do away with the jurisdictional limitations as well as limited grounds for complaints.
• RBI will provide a single reference point for the customers to submit documents, track status of complaints filed and provide feedback.
• The complaints that are not covered under the ombudsman scheme will continue to be attended to by the Customer Education and Protection Cells (CEPCs) which are located in the 30 regional offices of RBI.