SIP- The Reserve Bank of India (RBI) has taken a big step to make it easier for the common investor to invest in government securities, especially Treasury Bills (T-Bills). RBI Governor Sanjay Malhotra announced the launch of Systematic Investment Plan (SIP) in T-Bills through the Retail Direct platform during the monetary policy meeting on Wednesday.

Actually, this initiative has been created on the lines of SIP in mutual funds, its objective is to enable retail investors to invest in government securities. T-Bills is a government undertaking, so it is considered risk-free, and there is no liquidity crisis in it. Due to which it is attractive for retail investors. Financial experts have praised this move. It was called a positive step towards strengthening the domestic bond market.

What is the Retail Direct Platform?

The Retail Direct Platform was launched by the RBI in November 2021 under the Retail Direct Scheme (RDS). This platform allows individual investors to open Gilt Accounts with the RBI and invest directly in Government Securities or G-Secs. Through this, investors can participate in primary auctions and also trade these securities in the secondary market.

What are Treasury Bills (T-Bills)?

T-Bills are short-term debt instruments issued by the Government of India to meet the temporary liquidity needs of the government. They are issued in the following tenures:

14 days

91 days

182 days

364 days

T-Bills do not pay interest, but are bought at a discount and redeemed at face value on maturity. This gives the investor a return in the form of capital appreciation.

Let us understand this with an example, if a 91-day T-Bill with a face value of Rs 130 is bought at Rs 128, then on maturity the investor will get Rs 130, i.e. a profit of Rs 2, the minimum investment in this is Rs 10,000, for more there is an option of multiple investment.

How to do SIP in T-Bills?

RBI has provided the facility to start SIP for T-Bills on the Retail Direct platform, which allows investors to make automatic investments at regular intervals (weekly, monthly). Investors can modify or cancel these rules at any time. This eliminates the need to manually bid in every auction, making the investment process simple and time-efficient.

Additionally, the SIP facility helps investors organize their investments and plan long-term savings. For example, an investor can set up a SIP to invest in T-Bills of Rs 10,000 every month, and this amount will automatically get invested in the next auction.

How much is the benefit?

This platform encourages regular investment like mutual funds, thereby creating a saving habit among retail investors. T-Bills are backed by the government, hence are risk-free. They offer better returns (usually 6-7% annually, depending on the tenure and market rates) than savings accounts (2-3% interest). Investors can change the auto-bid rules as per their needs.

 

Desclaimer: For any financial invest anywhere on your own responsibility, Times Bull will not be responsible for it.