📘 Q.12 IAS Prelims 2021— Economics (Retail Direct, NDS-OM, CDSL)
🧷 Authentic Classroom Explanation by IAS Monk
📌 The Question:
With reference to India, consider the following statements:
- Retail investors through demat account can invest in ‘Treasury Bills’ and ‘Government of India Debt Bonds’ in primary market.
- The ‘Negotiated Dealing System-Order Matching’ is a government securities trading platform of the Reserve Bank of India.
- The ‘Central Depository Services Ltd’ is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.
📌 Which of the statements given above is/are correct?
(a) 1 only (b) 1 and 2 (c) 3 only (d) 2 and 3
📌 Correct Answer: (b)
🧠 Classroom Explanation
✅ Statement 1: Correct
Retail investors can invest in T-Bills and Government of India dated securities in the primary market via the RBI Retail Direct route (through an RBI retail gilt account/online access).
Earlier, retail participation was mostly via non-competitive bidding through exchanges or via gilt mutual funds, but Retail Direct opened a cleaner door for individuals.
✅ Statement 2: Correct
NDS-OM is the screen-based electronic order-matching platform for trading government securities in the secondary market, owned/operated under RBI’s ecosystem.
It is the backbone “trading floor” for G-Secs for eligible members.
❌ Statement 3: Incorrect
CDSL is promoted by BSE and leading banks (and other institutions).
It is not jointly promoted by RBI + BSE.
➡️ Therefore, only Statements 1 and 2 are correct.
✨ Enrichment Points (Exam Edge)
- Primary market = where securities are issued first time (auctions for T-Bills/G-Secs).
- Secondary market = where existing securities are traded among participants.
- Retail Direct = RBI’s “direct doorway” for individuals into G-Secs (both primary + secondary access through RBI’s platform).
- Depository (like CDSL/NSDL) = holds securities in electronic form and enables smooth transfer by book entry.
🔍 Curiosity Raiser
If Retail Direct exists, why do many retail investors still prefer gilt mutual funds instead of buying G-Secs directly?
🧘 IAS Monk Whisper
The market has many gates,
but wisdom is knowing which gate leads to peace,
and which gate leads to noise.