'NSE goBID' mobile app to make investing in G-secs, T-bills more convenient

Active investors can trade in them once interest rates start to decline

NSE
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Tinesh Bhasin
Last Updated : Dec 04 2018 | 11:37 PM IST
To make it easier for retail investors to bid in government securities (G-secs) and Treasury bills (T-bills), the National Stock Exchange (NSE) has launched the ‘NSE goBID’ mobile app. It allows investors to bid for securities on-the-go and make payment directly from their bank accounts using unified payments interface and also internet banking.

About six months ago, the NSE and the BSE had launched platforms to enable retail investors to participate in the non-competitive bidding section of G-sec auctions. These auctions take place on Fridays, while those for T-bills are held on Wednesdays. Five per cent of these auctions are reserved for non-competitive bidding that retail investors can participate in. The NSE’s app makes it easier and convenient for investors to buy the securities.

Investing in G-secs can be attractive when the interest rates have either peaked or on a decline. “We feel the central bank in India, and even across the world, would stop hiking interest rates in the next three to six months. That will be the peak for the interest rate cycle. For active investors, investing in G-secs for investors can be lucrative once that happens,” says Amit Jain, co-founder, Ashika Wealth Advisors.


By ‘active investors’, Jain means those who are willing to trade in G-secs in the secondary market once the interest rates start falling and, in turn, prices start rising. While the retail secondary market for bonds is not developed, Jain says G-secs don’t face liquidity issues. “There’s always demand for G-secs, and you will see more traction once the interest rate cycle turns,” says Jain.

Investors don’t need to open any special accounts to participate in these auctions. They can do so through their existing broking accounts. The brokerage fee that can be charged cannot exceed 0.06 per cent, or 6 paise for every Rs 100 worth of allotment value. When signing up on the NSE’s app, an investor will need to link his/her broking and depository account. The NSE goBID platform will handle order collection, payment, and refund that are currently required to be managed by trading members (brokers).

Through the app, retail investors can invest in T-bills of 91 days, 182 days, and 364 days, and various government bonds from one year to almost 40 years. Investment can be done almost every week after a one-time registration.


Investing in G-secs also makes sense for investors who want to lock in a portion of their investment for a longer tenure. Most banks fixed deposits have a tenure of 10 years. With G-secs, you can lock into current interest rates for 30 years or more. G-secs also allow investors to reduce the credit risk in their portfolios. Since these securities have a sovereign guarantee, credit risk gets eliminated.
But if you are not an active investor or don’t want to lock in your capital for a long tenure, there are limited alternatives to G-secs. You can look at gilt funds when interest rates start to fall. “The entry and exit need to be timed and should, therefore, be done under the guidance of an investment advisor,” Arvind Rao, founder, Arvind Rao & Associates.

Gilt funds are also highly volatile. Another option is Government of India’s savings bond that offers 7.75 per cent returns. These bonds are, however, available only for a seven-year tenure. Early exits are only possible for investors aged 60 or above.
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