Summary of this article
RBI draft expands government securities market access for individual investors.
Multiple routes proposed for retail participation through demat and gilt accounts.
Draft retains restrictions on short selling by individual investors.
The Reserve Bank of India (RBI) has released draft directions for the secondary market trading of government securities. The draft explicitly states that resident individuals are also eligible to engage in this market, along with institutions and other eligible market participants.
The proposed directions, titled Master Direction - Reserve Bank of India (Secondary Market Transactions in Government Securities) Directions, 2026, will be applicable to transactions in the over-the-counter market as well as recognised stock exchanges.
The draft proposes that any individual, company, firm, trust, pension fund, provident fund, or Hindu Undivided Family (HUF), who is a resident of India, will be allowed to engage in secondary market transactions of government securities. Eligible non-resident investors who are permitted under foreign exchange regulations will also be able to participate.
Multiple Access Routes For Individuals
The proposed directions outline various ways through which individual investors can participate in the market.
Individuals holding a Retail Direct Gilt Account will be able to undertake transactions through the RBI Retail Direct Scheme. Those maintaining demat accounts with eligible depository participant banks that are direct members of the Negotiated Dealing System-Order Matching (NDS-OM) platform can also access the market through their banks.
In addition, individuals with demat accounts linked to the Securities and Exchange Board of India (Sebi)-registered depositories can undertake transactions through the Stock Broker Connect facility.
The draft also provides that direct members of NDS-OM may offer web-based access to individual account holders on request, allowing them to undertake transactions electronically.
Minimum Investment And Trading Hours
Under the proposed framework, transactions in government securities can be undertaken for a minimum amount of Rs 10,000 in face value and in multiples of Rs 10,000 thereafter, unless the RBI specifies otherwise.
Market timings for transactions in government securities will be from 9:00 am to 5:00 pm on Mumbai working days.
All transactions will generally be settled on a T+1 basis, meaning settlement will take place one business day after the trade date.
Separate Rules For Certain Transactions
The draft directions also cover transactions such as "when issued" trades and short sales.
Resident individuals and HUFs will be permitted to take only long positions in the "when issued" market, which allows trading in certain government securities before their formal issuance.
Short sale transactions, however, will be restricted to scheduled commercial banks, standalone primary dealers, certain urban cooperative banks and other regulated entities that receive approval from the relevant financial sector regulator.
The RBI has invited comments on the draft directions before finalising the framework. Once implemented, the directions will govern secondary market transactions in government securities undertaken in the over-the-counter market and on recognised stock exchanges.
