Reserve Bank of India has exempted institutional investors from margin requirements for government securities and would consider their securities held in demat account for statutory liquidity ratio purposes to encourage participation in g-secs trading on stock exchanges and promote retailing.

Institutional investors are expected to provide liquidity in g-secs market and promote retailing on SEs and for this purpose, RBI would provide value free transfer of securities between SGL\CSGL (subsidiary general ledger\ constituents' subsidiary general ledger) accounts (held with RBI) and their demat accounts with the depositories.

The scheme for retail trading was expected to improve efficiency in g-sec market and provide transparency, depth, and liquidity, an RBI release said in Mumbai on Thursday.

The retail investors interested in transacting in g-secs should have a demat account with the depository participant to buy and sell the bonds as is done in the case of shares.

The central bank said minimum order size for g-sec trading has been kept at a low of Rs 1,000 (10 units of face value Rs 100 each) to ensure retail participation.

The trading in bonds would be done under T+3 rolling settlement system and the bonds would be transferred into investor's demat account after three working days from the date of trade, it added.

RBI said all outstanding and newly issued government dated securities would be available for trading on SEs from Thursday while state government bonds and treasury bills would be added in phases.