November 18, 2019: National Stock Exchange of India Ltd (NSE), India’s leading stock exchange today introduced facilitation of subscription in State Development Loans (SDLs) through its e-Gsec platform to enable retail participation through the non-competitive bidding (NCB) route.
SDLs are dated securities issued by State Governments through normal auction similar to the auctions conducted for dated securities issued by the Central Government. The RBI conducts auctions for SDLs on a weekly basis where 10% of the notified amount is allotted for eligible investors under the scheme for non-competitive bidding. The interest on SDL is received at half-yearly intervals and the principal is repaid on the maturity date. Like dated securities issued by the Central Government, SDLs issued by the State Governments also qualify for statutory liquidity requirement of the banks.
The NCB facility was introduced by the Reserve Bank of India (RBI) to encourage retail participation in the primary market for Government securities and SDLs. NSE acts as facilitator in NCB to aggregate the bids received from the retail investors and submits a single bid to RBI. NSE has been offering G-sec and T-bills issued by central government from April 2018 to facilitate retail participation in these securities. Going forward, SDLs will also be offered to retail investors through this facility.
Mr Vikram Limaye, MD & CEO, NSE said, “NSE has been successfully facilitating retail participation in government securities through NSE e-Gsec platform for more than a year now. Adding SDLs in the current offerings will further add to the variety of investment avenues at NSE for greater retail participation in fixed income products. NSE will continue to offer vanilla retail products leveraging on its robust technology and retail distribution capabilities. NSE’s wide presence and reach through its members along with investor awareness and education initiatives is likely to bring higher participation by retail in this asset class, helping issuers to diversify their investor base.”