..........The Reserve Bank of India (RBI) is looking to allow banks to open basic gilt or demat accounts for limited transactions and a certain amount of holdings, with reduced charges for retail investors in G-Secs. It may even consider giving banks incentives for opening these accounts. There are three key reasons why the RBI thinks it’s a winning proposition: one, it allows investment across the yield curve, from 91-day Treasury Bills to G-Secs with a 30-year tenure; two, given the inverse relationship between bond prices and interest rates, one can ride on the prospect of capital gains when interest rates moderate; and three, from the government’s perspective, a diversified investor base ensures stable demand for G-Secs. Will it work? “On paper, it is a great idea, but............
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