India Wants Retail Investors to Trade Nation’s Sovereign Debt

Retail traders in India will soon be able to trade the nation’s sovereign debt, as policymakers seek to fund another near-record amount of issuances.

Banks will also be allowed to hold more bonds in their held-to-maturity portfolio for longer, and along with the access given to individual investors, should help the government with its borrowing plans, the Reserve Bank of India said Friday at its policy address. The RBI plans to provide retail investors with online access to primary and secondary government bond markets.

The move underlines how the RBI is seeking to shore up a jittery debt market after the government announced plans to borrow 12 trillion rupees ($165 billion) for the new fiscal year. Other emerging-market nations in Asia have also sought to raise funds from citizens, with the Philippines selling debt directly to individuals to battle the pandemic crisis.

“It may just be the beginning of a viable substitute for the small savings schemes at market rates,” said Mahendra Jajoo, CIO, Fixed Income, Mirae Asset Management India, referring to a program where the government offers higher interest rates for deposits. “However, much like sovereign gold bonds, the likely pick-up pace will be at a slow rate.”

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