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Published on 5 April 2025

RBI Improves NDS-OM Access for Retail Investors Through New Guidelines

RBI Updates Access Criteria for NDS-OM to Enhance Retail Investor Participation

The Reserve Bank of India (RBI) has revised the access criteria for the Negotiated Dealing System – Order Matching (NDS-OM) platform, permitting SEBI-registered non-bank brokers to facilitate trades for retail investors in government securities. This update, part of the Monetary Policy Statement for 2024-25, is now reflected in the newly released Master Direction – Reserve Bank of India (Access Criteria for NDS-OM) Directions, 2025, which supersedes the guidelines from 2024.

Eligible entities, including banks, financial institutions, mutual funds, pension funds, and insurance companies, may access the NDS-OM directly. Others can participate through indirect access or Stock Broker Connect. The updated framework intends to simplify participation and improve market accessibility, effective immediately.

Key Highlights from the Circular

  1. Access for SEBI-registered Non-Bank Brokers
    As stated in the Statement on Developmental and Regulatory Policies, the NDS-OM platform will now be available to SEBI-registered non-bank brokers to enhance retail investor trades in government securities.

  2. Updated Access Criteria
    Necessary modifications to the access criteria have been integrated into the Master Direction – Reserve Bank of India (Access Criteria for NDS-OM) Directions, 2025. This replaces the prior guidance issued on October 18, 2024.

  3. Legal Authority
    These Directions have been issued under the authority granted by section 45W of the Reserve Bank of India Act, 1934, alongside section 45U.

  4. Immediate Effectiveness
    The Directions take effect immediately.

Access to NDS-OM

Eligibility Criteria for Direct Access

The following entities are eligible for direct access to NDS-OM upon fulfilling all stipulated requirements:

  • Banks
  • Standalone Primary Dealers
  • Non-Banking Financial Companies, including Housing Finance Companies
  • All India Financial Institutions
  • Mutual Funds
  • Provident Funds
  • Pension Funds
  • Insurance Companies
  • Regulated Market Infrastructure Institutions (MIIs) with specific Reserve Bank permissions
  • Any additional entity specifically allowed by the Reserve Bank.

Requirements for Direct Access

Eligible entities must meet these conditions to apply for direct access:

  1. Maintain a Subsidiary General Ledger (SGL) account with the Reserve Bank.
  2. Hold a current account with the Reserve Bank or a Designated Settlement Bank.
  3. Be a member of the securities settlement segment of Clearing Corporation of India Limited (CCIL).

Application Process

Entities seeking direct access must submit an application to the Chief General Manager, Financial Markets Regulation Department, RBI, using the format specified in Annex – 1. They may also use the procedures outlined in the Master Directions on Access Criteria for Payment Systems.

Granting of Direct Access

The Reserve Bank may grant direct access provided the applicant meets all eligibility criteria:

  • The Reserve Bank may request additional information or clarification from applicants.
  • Access is not transferable, and the Reserve Bank may impose further conditions if the entity violates any provisions.

The Reserve Bank retains the right to suspend or terminate the access, after a fair hearing, if it finds that the entity has become ineligible or has violated the conditions set forth.

Indirect Access to NDS-OM

Entities eligible to invest in government securities may seek indirect access if:

  • They do not meet direct access criteria.
  • They lack the requisite requirements for direct access.
  • They were not granted direct access.

Indirect access must be conducted via an entity with direct access that assumes settlement responsibilities.

Stock Broker Connect

Eligible Investors and Brokers

  • Individual investors must maintain a demat account with a SEBI-registered depository.
  • Stock brokers must be registered with SEBI and have an agreement with a CCIL member to manage settlement responsibilities for transactions.

Application and Approval Process

Stock brokers wishing to facilitate access to NDS-OM for their clients must apply as per the format specified in Annex – 2. The Reserve Bank will evaluate applications for eligibility and may impose conditions.

Compliance and Responsibilities

Stock brokers must comply with all RBI regulations while granting access. The Reserve Bank may suspend or terminate any approval if violations of statutory provisions or conditions occur.

Conclusion

The RBI's revised access criteria for the NDS-OM platform significantly enhance options for retail investors, fostering greater participation in the government securities market. The immediate implementation of these changes reflects the RBI's commitment to improving financial market infrastructure, ensuring compliance, and protecting the public interest.

(Dimple Bhandia)
Chief General Manager
Reserve Bank of India

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