RBI’s customer-centric initiatives


    In News

    • Prime Minister launched two customer-centric initiatives of the Reserve Bank of India (RBI)
      • The RBI Retail Direct Scheme and
      • The Reserve Bank – Integrated Ombudsman Scheme. 


    • February 2021: RBI made the proposal to allow retail investors to open gilt accounts to invest in G-secs directly.
    • Retail Investors: An individual or non-professional investor who buys and sells securities through brokerage firms or savings accounts.

    RBI Retail Direct Scheme

    • It is aimed at enhancing access to the government securities market for retail investors. 
      • This scheme offers a new avenue for directly investing in government securities issued by both Centre and state governments. 
    • Investors will be able to easily open and maintain their government securities account online with the RBI, free of cost.

    Significance of RBI Retail Direct Scheme

    • Improved Ease of Access:
      • Will make the process of G-sec trading smoother for small investors.
      • Small investors in the country will get a safe medium of investment in government securities.
      • Raising retail participation in G-secs and will improve ease of access.
    • Facilitate Borrowings:
      • The scheme will facilitate the smooth completion of the government borrowing programme in 2021-22.
      • Government can raise more money from the Domestic market itself.
    • Financialise Domestic Savings:
      • The scheme will promote the financialisation of a vast pool of domestic savings and could be a game-changer in India’s investment market.
      • It may also reduce the government External Borrowings which are generally accompanied by currency fluctuation risks.

    Government Security (G-Sec)

    • It is a tradable instrument issued by the Central Government or the State Governments.
    • It acknowledges the Government’s debt obligation
    • It practically carries no risk of default and, hence, are called risk-free gilt-edged instruments.
      • Gilt-edged securities are high-grade investment bonds offered by governments and large corporations as a means of borrowing funds.
    • Such securities are of two types:
      • Treasury Bills:
        • They are short term instruments.
        • With original maturities of less than one year- presently issued in three tenors, namely, 91 days, 182 days and 364 days.
      • Government bonds or dated securities: 
        • They are Long term instruments.
        • With original maturity of one year or more.
    • In India, the Central Government issues both treasury bills and bonds or dated securities 
      • while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs).

    G-Sec Market

    • Earlier before the scheme was launched the G-sec market was dominated by institutional investors 
      • Which are large market actors such as banks, mutual funds and insurance companies.
      • These entities trade in lot sizes of Rs 5 crore or more.
    • So, there was less liquidity in the secondary market for small investors who wanted to trade in smaller lot sizes.
      • The primary market is where securities are created, while 
      • The secondary market is where those securities are traded by investors.
    • There was no easy way for them to exit their investments. 
    • Thus, direct G-secs trading was not a popular option among retail investors.

    RBI Integrated Ombudsman Scheme

    • This will help in improving the grievance redress mechanism for resolving customer complaints against RBI’s regulated entities. 
    • It will do away with the jurisdictional limitations as well as limited grounds for complaints. 
    • The scheme is based on ‘One Nation-One Ombudsman’ with one portal, one email, and one address for the customers to lodge their complaints.
      • The bank customers will be able to file complaints, submit documents, track status, and give feedback through a single email address. 
      • The mechanism will cater to all the customers from banks, NBFCs and the non-bank issuers of prepaid payment instruments.
    • There will also be a multilingual toll-free number that will provide all relevant information on grievance redress.
    • The complaints that are not covered under the ombudsman scheme will continue to be attended to by 
      • The Customer Education and Protection Cells (CEPCs) are located in the 30 regional offices of RBI.

    Significance of RBI Integrated Ombudsman Scheme

    • Uniformity and streamlined user-friendly mechanism:
      • The single national-level integrated digital portal for the RBI ombudsman scheme.
      • It will add value to the scheme and bring customer delight and financial inclusion.
    • Consumer Friendly:
      • There will be a single point of reference for customers to file their complaints, submit the documents, track status, and provide feedback.  
      • The multilingual toll-free number will provide all relevant information on grievance redress and assistance for filing complaints. 
      • The redressal will continue to be cost-free for customers of banks and members of the public.

    Way Forward and Conclusion

    • Access to the Capital:
      • RBI’s two innovative customer-centric initiatives will increase investment avenues, make accessing the capital market easier, safer.
    • Safer Investments:
      • The schemes while expanding the scope of investment will also make access to capital markets easier and more secure for investors.
    • Technology: 
      • RBI has been leveraging technology & innovation for enhancing the efficiency of its services. 
      • RBI’s developmental role is focused on further deepening financial inclusion and undertaking people-centric initiatives

     Source: LM