With reference to India, consider the following statements:
- Retail investors through demat account can invest in ‘Treasury Bills’ and ‘Government of India Debt Bonds’ in primary market.
- The ‘Negotiated Dealing System-Order Matching’ is a government securities trading platform of the Reserve Bank of India.
- The ‘Central Depository Services Ltd.’ is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.
Which of the statements given above is/are correct?
[UPSC Civil Services Exam – 2021 Prelims]
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 2 and 3 only
Answer: (b)
Explanation:
- The Reserve Bank of India (RBI) has recently announced a structural reform that allows retail investors to directly invest in the government’s primary and secondary bond market. This reform aims to deepen the bond market in India.
- To facilitate this, the RBI introduced the Negotiated Dealing System-Order Matching (NDS-OM) in August 2005.
- NDS-OM is an anonymous screen-based order matching module that enables participants to trade bonds by placing or accepting orders on the system.
- Under this reform, retail investors can access the NDS-OM through their Demat accounts with depositories such as NSDL and/or CDSL.
- They can use their Demat accounts to carry out transactions and hold Government Securities (G-Secs).
- Retail investors can access the G-Sec market through existing NDS-OM primary members who also serve as Depository Participants for NSDL and/or CDSL.
- The objective of this scheme is to provide retail individual investors with efficient and seamless access to the same G-Sec market that large institutional investors utilize.
- This reform is expected to contribute to the development and expansion of the bond market in India.
