You can buy them for a minimum of Rs 10,000, can avail loan on these bonds

IDBI Bank has become the first commercial bank in the country to sell government bonds without any brokerage or commission to retail investors. The bank launched a government securities portal called the IDBI Samriddhi G-sec Portal which will buy and sell government bonds issued both by the central and state governments.

The government bonds, which are part of the bank's treasury book, will be the ones that are open for investment. The minimum quantum to be invested is Rs 10,000. Retail investors can also avail loans against these securities from the bank. The payments can either be done through a inter-account fund transfer by opening a saving bank account with the IDBI Bank or through the electronic fund payment system of the Reserve Bank of India (RBI).

The average volume of trade in the government securities market is Rs 27,000 crore and the retail participation market is less than one per cent. The lacklustre participation is due to limited point of sale for these bonds. The investor had to either approach a broker or invest through a mutual fund.

Melwyn Rego, execu tive director, IDBI Bank, said, "RBI during various policy pronouncements has been emphasising the need for banks to take necessary steps for providing the infrastructure for retail investors to make investments in government bonds. Retail investors having access to the internet and a demat account can now freely buy and sell government bonds through the portal. Retail investors, thus, get a rewarding opportunity to participate in the India growth story.

There will be no tax deduction at source for the interest earnings. However, it will be part of the taxable income for the investor.

NS Venkatesh, head of treasury, said, "We hope to be the market maker for the government bonds. The quotes for the bonds on the sale will be updated thrice a day as the investors will not see the real time movement in the bonds. It will be the first organised effort to channelise retail savings into government bonds. It will also provide an opportunity for retail investors to participate in the Indian government development work, because the government bonds are floated to raise money for various government programmes."

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