Context: Recently, the Reserve Bank of India (RBI) has announced the launch of a mobile application, the 'G-sec App', as part of its Retail Direct Scheme. 

• This initiative aims to simplify the process of investing in government securities (G-Secs) for retail investors.

About Government securities

• Government securities, also known as G-Secs, are investment instruments issued by governments to raise funds.

• They offer a low-risk investment option with fixed interest rates.

• Treasury bills are short-term securities issued for less than 12 months, while bonds are issued for longer durations.

About G-sec App

• The G-sec App serves as a one-stop solution for retail investors looking to invest in government bonds and treasury bills.

• It provides a user-friendly interface for buying and selling securities, eliminating the complexities of traditional investment methods.

How can individuals access G-Sec offerings?

• Investors wishing to open a Retail Direct Gilt account directly with the RBI can do so through an online portal set up for the purpose of the scheme.

• Once the account is activated with the aid of a password sent to the user’s mobile phone, investors will be permitted to buy securities either in the primary market or in the secondary market.

About Retail Direct Scheme

• Retail Direct Scheme was rolled out in November 2021, giving access to individual investors to maintain gilt accounts with RBI and invest in government securities.

• Using this app, investors can buy central and state government bonds as well as Treasury bills.

• It enables investors to buy securities in primary auctions as well as buy/sell securities through the Negotiated Dealing System-Order Matching system (NDS-OM) platform.

• A Gilt Account can be compared with a bank account, except that the account is debited or credited with treasury bills or government securities instead of money.

Benefits of RDS

• With the government being the borrower, there is a sovereign guarantee for the funds and hence zero risk of default.

• Also, government securities may offer better interest rates than bank fixed deposits, depending on prevailing interest rate trends.

How does it work?

• Under the scheme, small investors can buy or sell government securities (G-Secs), or bonds, directly without an intermediary like a mutual fund.

• However, the same tax rules apply to income from G-Secs.

• The minimum amount for a bid is Rs 10,000 and in multiples of Rs 10,000 thereafter.

• Payments may be made through Net banking or the UPI.