Investing in government securities became a lot easier when the Reserve Bank of India (RBI) launched its retail direct platform two years ago. An advantage of the portal is that it does not charge brokerage, commission, annual maintenance fees or account opening fees. Even non-resident Indians (NRI) can open an RBI retail direct account to invest in government securities (G-Secs), state development loans (SDLs) and treasury bills (T-bills). But NRIs cannot invest in sovereign gold bonds (SGBs) and floating rate bonds through this route.
“According to the Foreign Exchange and Management Act, 1999, NRIs and Overseas Citizens of India (OCIs) can invest in instruments like G-Secs, SDLs and T-bills directly in the primary market via the RBI retail direct platform. Further NRIs and OCIs can also buy and sell the above-mentioned instruments in the secondary markets via an RBI retail direct account,” says Leena Chacko, Partner, Cyril Amarchand Mangaldas, a law firm.
“Under the Fully Accessible Route (FAR) regulations there is no limit on investment by Non-Resident Indian retail investors,” says Mukesh Chand, Senior Counsel, Economic Laws Practice, a law firm.
"NRIs are allowed to invest in Government Securities both on repatriable and on non-repatriable basis, depending upon the terms and conditions of the said instrument or investment scheme. There is as such no restriction on NRIs to invest in Government securities," says Diviay Chadha, Partner, Singhania & Co, a law firm.
Also read: RBI floating rate bonds offers 8.05% interest
How NRIs can open an RBI retail direct account
To open an RBI retail direct account, NRI must have:
- An Indian mobile number (it should be linked with Aadhaar if NRI is not on central KYC (CKYC) registry),
- An NRO (non-resident ordinary) savings bank account with UPI/net banking facility,
- PAN,
- A cancelled cheque of the NRO bank account, scanned copy of signature.
“An NRO bank account is a savings account which can be opened by an NRI only for incomes earned in India by them. An NRI can use an NRO bank account for any payment in India,” says Akshar Shah, Founder, Fixed Invest, an investment platform.
Here’s a step-by-step guide for opening RBI retail direct account:
Step 1: Visit https://rbiretaildirect.in/#/rdg-account-registration and fill in the details: account type (single/joint), full name (as per PAN card), email ID, mobile number, PAN, date of birth and login name (required for logging into the website after registration).
Source: RBI retail direct website
Once the mobile number and email ID have been entered, “Generate OTP” option will appear. Click on it and enter the OTP in the earmarked slot. Click on the “Preview” button.
Source: RBI retail direct website
Source: RBI retail direct website
Step 2: A new web page will show all the details that have been entered. If the information is correct, click on “Submit”.
Step 3: The page will now show the application number of the individual’s RBI retail direct account opening process. An “Initiate KYC Process” button will be visible. Click on that. The RBI will send login credentials in a separate email after the KYC process is completed.
Step 4: Clicking the “Initiate KYC Process” will open a new web page called “E-KYC Portal”. Click on the “Start” button here.
Step 5: The page will show two options: Proceed with CKYC and proceed with offline KYC.
NRIs on the CKYC registry can proceed with the first option. Others should opt for the offline option. If the online process fails for some reason, offline KYC is the only way to proceed. Click “Next” after selecting the KYC option.
Step 6: Input the CKYC number and verify the details. If the details get verified, the KYC process is complete.
CKYC registration is generally done by banks. If the NRI’s bank had done it, the CKYC number and document would have been sent to the registered email ID of the NRI. If the CKYC has not been done or is not working, choose the offline KYC process. It will require uploading scanned copies of the PAN. Click “Proceed” after doing this.
Step 7: The page will now ask for Aadhaar details. Give consent to the RBI to use Aadhaar data to complete the KYC process. This data is used only for KYC purposes and is not stored. Click on “Next”.
Step 8: The page will ask for upload of offline Aadhaar KYC file. This document can be downloaded from the Unique Identification Authority of India (UIDAI) portal. Upload the file and click “Search Details”.
Also read: How to generate offline paperless Aadhaar KYC file
Step 9: The page will display the details captured by the RBI through the uploaded offline Aadhaar eKYC file. Verify and click “Next”. The page will ask for additional personal details. Fill it in and submit.
Step 10: Fill up the “Tax Residency Details” section and submit it.
Step 11: Give consent to comply with the Prevention of Money Laundering Act (PMLA) and FATCA guidelines.
Step 12: Now upload a scanned copy of your signature on a white paper. Upload the file in PDF or JPEG and click “Next”.
Step 13: “List of Approved Banks” will be on display. Select your bank account from a drop-down menu and click on “Submit”.
Upload a cancelled bank cheque. You can add bank details later; however, investments can be done only once the bank details are added. Click “Next” after the bank is added.
Step 14: A new page will ask for details of the nominee. Fill up the relevant blank fields and click on “Next”.
Step 15: Now it is time for video KYC. The web page will have an infographic guide. Go to a well-lit room, keep the PAN card ready and click on “Get Started”.
An RBI authorised KYC agent will ask some questions. The agents are available during banking hours. The screen will show your number on the queue. If it is taking too much time, reschedule the video call to a convenient time. Rescheduling can be done up to 3 days ahead.
Once the KYC is processed, the RBI will enable your retail direct account and also email the login credentials. You will have to login using the credentials given by the RBI and then change your password after logging in.
